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Posted on Sep 29, 2024

1. Write the payoff and profit equation draw the payoff and profit diagrams of the following derivatives. Also determine the payoff and profit for each

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1. Write the payoff and profit equation draw the payoff and profit diagrams of the following derivatives. Also determine the payoff and profit for each of these derivatives in the tabular form. Long Forward Short Forward F0,1 = 3, T = 1, r = 10% FOT = 3, T = 1, r = 10% Payoff equation Payoff equation Profit equation Profit equation Payoff and profit diagram Payoff and profit diagram 8 2 7 5 5 3 3 2 2 1 0 0 -1 -1 -2 2 3 3 5 0 1 2 6 8 6 -5 3 -1 0 1 2 5 Payoff and profit table Payoff and profit table SI Payoff Profit SI Payoff Profit 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 Long Call Short Call C=0.91, K = 3, T = 1, r = 10% C = 0.91, K = 3, T = 1, r = 10% Payoff equation Payoff equation Profit equation Profit equation Payoff and profit diagram Payoff and profit diagram 7 7 6 S 5 4 3 3 2 2 1 1 0 0 -1 -1 -2 . -2 - 3 4 -5 -6 -5 -2 0 1 2 3 6 6 -5 4 3 -1 0 1 2 3 5 6 7 Payoff and profit table Payoff and profit table ST Payoff Profit ST Payoff Profit 8 8 7 7 6 6 5 5 4 3 3 2 2 1 1 0 0 Long Put Short Put P = 0.91, K = 3, T = 1, r = 10% P = 0.91, K = 3, T = 1, r= 10% Payoff equation Payoff equation Profit equation Profit equation Payoff and profit diagram Payoff and profit diagram 8 7 7 6 6 5 5 3 3 2 2 1 O O -1 - 5 -5 0 1 5 6 3 -1 1 2 Payoff and profit table Payoff and profit table SI Payoff Profit ST Payoff Profit 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 1. Write the payoff and profit equation draw the payoff and profit diagrams of the following derivatives. Also determine the payoff and profit for each of these derivatives in the tabular form. Long Forward Short Forward F0,1 = 3, T = 1, r = 10% FOT = 3, T = 1, r = 10% Payoff equation Payoff equation Profit equation Profit equation Payoff and profit diagram Payoff and profit diagram 8 2 7 5 5 3 3 2 2 1 0 0 -1 -1 -2 2 3 3 5 0 1 2 6 8 6 -5 3 -1 0 1 2 5 Payoff and profit table Payoff and profit table SI Payoff Profit SI Payoff Profit 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 Long Call Short Call C=0.91, K = 3, T = 1, r = 10% C = 0.91, K = 3, T = 1, r = 10% Payoff equation Payoff equation Profit equation Profit equation Payoff and profit diagram Payoff and profit diagram 7 7 6 S 5 4 3 3 2 2 1 1 0 0 -1 -1 -2 . -2 - 3 4 -5 -6 -5 -2 0 1 2 3 6 6 -5 4 3 -1 0 1 2 3 5 6 7 Payoff and profit table Payoff and profit table ST Payoff Profit ST Payoff Profit 8 8 7 7 6 6 5 5 4 3 3 2 2 1 1 0 0 Long Put Short Put P = 0.91, K = 3, T = 1, r = 10% P = 0.91, K = 3, T = 1, r= 10% Payoff equation Payoff equation Profit equation Profit equation Payoff and profit diagram Payoff and profit diagram 8 7 7 6 6 5 5 3 3 2 2 1 O O -1 - 5 -5 0 1 5 6 3 -1 1 2 Payoff and profit table Payoff and profit table SI Payoff Profit ST Payoff Profit 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0