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06-06-2023
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A trader borrows from a bank to buy 100 European put options. Each put has premium $1.80, strike price $12, and expires in one month.
The current interest rate is 3% per month. At expiry each underlying asset is worth $8.
At expiry the trader buys 100 shares on the open market, exercises all put option, and returns the borrowed money to the bank with interest. What is the traders profit? Give your answer correct to two decimal places.
What is the traders profit? Give your answer correct to two decimal places.

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