What is the maximum net profit that the buyer

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Reference no: EM132073619

Consider European put options on ABC Company shares with an exercise price of EUR 50. The premium today is EUR 17.

(a) What is the maximum net profit (“payoff”) that the buyer of these options can make ?

(b) What is the maximum net loss (“payoff”) that the buyer of these options can make ?

(d) What is the maximum net loss (“payoff”) that the seller of these options can make ?

(e) What is the stock price of ABC corresponding to the “break-even”, i.e. no net profit or loss (“payoff”) for the buyer of these options ?

(f) What is the stock price of ABC corresponding to the “break-even”, i.e. no net profit or loss (“payoff”) for the seller of these options ?

Please disregard the fees and commissions, and the time value of money.

Reference no: EM132073619

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