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Bed Bath and Beyond (BBBY), once a popular meme stock, has recently been ignored. Currently trading at $3.49 per share, you believe the stock is
Bed Bath and Beyond (BBBY), once a popular meme stock, has recently been ignored. Currently trading at $3.49 per share, you believe the stock is undervalued and decide to buy 10 shares. One month later, the stock price rises to $9.42. Assume an interest rate of r = 0.01 (1%) per annum. (1.50 Points) (a) Create a payoff and profit diagram for this transaction. Be sure to indicate your max profit and max loss and to label all axis. (b) What is your breakeven price? (c) What is your payoff and profit per share in this scenario?
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