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A one-year call option on a stock with a strike price of $30 costs $3. A one-year put option on the stock with a strike price of $30 costs $4. Suppose that a trader buys two call options and one put option.
i) What is the breakeven stock price, above which the trader makes a profit?
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ii) What is the breakeven stock price, below which the trader makes a profit?
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Economic Activity
The actions that involve the production, distribution, and consumption of goods and services in an economy.
Marginal Analysis
An examination of the benefits and costs of one additional unit of change.
Economic Individuals
Persons or entities that make decisions to maximize satisfaction or profits, based on the principles of economics.
Bit More
A small additional amount or degree.
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