Purchase Solution

# Derivative security analysis

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An investor discovers the call option prices on Platinum Mining Co are:
A call with an exercise price of \$1950 costs \$108,43. A call with an exercise price of \$2000 costs \$81,75 and a call with an exercise price of \$2050 costs \$59,98. All the options have the same maturity date. The current stock price is \$2000

a) Create a butterfly spread strategy and compute the net profit from this position if the stock price remains at \$2000 at the expiration date.

##### Solution Summary

This solution briefly discusses derivative security analysis. It includes providing a butterfly spreas strategy and computing the net profit.

##### Solution Preview

Hi,

** Please see the attached file for the complete solution response **

Given that,
Exercise price of first call=\$1,950
Price of the first call=\$108.43
Exercise price of second call=\$2,000
Price of the first call=\$81.75
Exercise price of ...

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###### Education
• MBA, Indian Institute of Finance
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