A trader creates a bear spread on a stock by buying one, Financial Management

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A trader creates a bear spread on a stock by buying one

A trader creates a bear spread on a stock by buying one 6-month $40-strike European put option at $5 and selling one 6-month $35-strike European put option at $3. What is the trader’s profit if he holds his position until maturity of the options and the stock price is $37 then?

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Financial Management: A trader creates a bear spread on a stock by buying one

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