Assume That a Share of Stock Is Currently Selling for $80,that

question 59

Essay

Assume that a share of stock is currently selling for $80,that a call option can be purchased for an $8 premium and an exercise price of $80,and that a put option can be purchased for a $4 premium and an exercise price of $80.If the investor buys one share,one call,and one put option,what type of price movements will be desirable? Illustrate the investor's potential profits.

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Definitions:

Freud

Sigmund Freud, an Austrian neurologist who founded psychoanalysis and is known for his theories of the unconscious mind and mechanisms of defense.

Repressed

Refers to the unconscious process of blocking unacceptable thoughts, feelings, or memories from conscious awareness.

Psychological Problems

Refer to mental disorders and emotional distress, characterized by disruption in thinking, behavior, energy, or emotion which makes it difficult to cope with the ordinary demands of life.

Token Economy

A behavioral modification technique using tokens as a form of reinforcement for desirable behaviors, which can be exchanged for rewards.