A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month,
what is the profit or loss at expiration (in 6 months) if the market index is $810?
A)
$20.00 gain
B)
$18.65 gain
C)
$36.29 loss
D)
$43.76 loss
Answer:
D
Business
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