Generalize the Formulas for Determining the Value of the Following

question 118

Essay

Generalize the formulas for determining the value of the following four option types: buying a call, buying a put, writing a call, writing a put.

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Definitions:

Payroll Tax

Taxes imposed on employers or employees, often calculated as a percentage of the salaries that employers pay their staff, funding social security and healthcare programs.

Social Security Tax

A charge imposed on both workers and their employers to finance the Social Security system, offering financial support to retirees, individuals with disabilities, and children of workers who have passed away.

Income Tax Decrease

A reduction in the rate at which individuals or corporations are taxed on their income, potentially leading to increased disposable income and consumption.

Federal Deficit

The amount by which a government's expenditures exceed its tax revenues.