A put and a call have the following terms:
Call: strike price $30
term three months
price $3
Put: strike price $30
term three months
price $4
The price of the stock is currently $29. You sell the stock short and purchase the call. Complete the following table and answer the questions.
a. What is the maximum possible profit on the position?
b. What is the maximum possible loss on the position?
c. What is the range of stock prices that generates a profit?
d. What advantage does this position offer?
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