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Compare the differences and similarities of three different ways of protecting a stock portfolio against price declines over the next three months: (i) short a
Compare the differences and similarities of three different ways of protecting a stock portfolio against price declines over the next three months: (i) short a three-month forward contract, (ii) buy an at-the-money three-month put option for cash, or (iii) buy an out-of-the-money three-month put option and sell an out-of-the-money three-month call option. Specifically, what are the initial cost and expiration date payoff potential for each strategy?
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