Express the formula and draw the payoff from this bond

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Reference no: EM131048114

In 1986 Standard Oil issued some bonds. At T, investors received $1000 and an additional amount based on the oil price at that time. The additional amount was 170 times the excess of the oil price over $25. The maximum additional amount paid was $2550.

Express the formula and draw the payoff from this bond at T. Can you decompose the payoff into 2 different types of options?

Reference no: EM131048114

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