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Unformatted text preview: to make it true. a. If the spot price at expiration on a put contact is greater than the exercise price, then the profit is zero. b. Your automobile insurance policy is a derivative. c. A hurricane is a nondiversifiable risk. d. The maximum profit on the sale of a call option is the premium. 4. Jon purchased a stock at the current spot price of . S One year later, Jon sold the stock for 200 for a profit of 50. The annual effective risk free interest rate is 8%. Determine . S...
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 Spring '08
 Staff
 Math

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