A European put option on the common stock XYZ Ltd. is currently selling for a price of $3 per share. The
expiration date of the put is 6 months from now. The relevant interest rate is 2% per annum. The exercise price of the put is $30 per share and the size of one put is 100 shares. Suppose Mr. Miller sells 10 of these puts now, find his profit(loss), assuming the spot price of the stock on the expiration date to be equal to either (i)$20 or (i)$40.
Secondly find the break-even level of the spot price of the stock on the expiration date.
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