Explain the superannuation fund will exercise the option

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Reference no: EM132797434

A superannuation fund is holding a large number of National Bank Limited shares in an investment portfolio and wishes to protect the value of the investment. The National Bank Limited shares currently trade at $24.49. The superannuation fund buys a put option with an exercise price of $24.00 per share and a premium of $0.95 per share

Required:

Problem 1: By entering into this option strategy, explain whether the superannuation fund will exercise the option if the spot price is above the exercise price.

Reference no: EM132797434

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