An investor buys a european put on a share for 3 the stock, Financial Management

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An investor buys a european put on a share for 3 the stock

An investor buys a European put on a share for $3. The stock price is $42 and the strike price is $40. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the investor s profit with the stock price at the maturity of the option.

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Financial Management: An investor buys a european put on a share for 3 the stock

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Financial Management: An investor buys a european put on a share for 3 the stock

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