Given the following information,
Price of a stock $50
Strike price of a six-month call $45
Market price of the call $9
Finish the following sentences:
a. The intrinsic value of the call is _________.
b. The time premium paid for the call is ________.
c. If an investor established a covered call position, the amount invested is _________.
d. The most the buyer of the call can lose is ________.
e. The maximum amount the seller of the call naked can lose is ________.
f. Which call is "in" or "out" of the money?
After six months (i.e., at the expiration date of the call), the price of the stock is $52.
g. The profit (loss)from buying the call is ________.
h. The price (loss)from selling the call naked is _______.
i. The profit (loss)from selling the call covered is __________.
j. The profit (loss)from selling the stock short six months earlier is _________.
k. At expiration, the time premium paid for a put or a call is _________.
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