European put option on the stock with strike price

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Reference no: EM131062998

An investor creates a protective put position by buying one share of a stock at $50 and buying a European put option on the stock with strike price $45 at $1.25. What is his profit if he holds his position until maturity of the option and the stock price is $55 then?

a. $-6.25

b. $1.25

c. $3.75

d. $5.00

e. $8.75

Reference no: EM131062998

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