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help me Q2) Start with $0 in your account (ignore margin requirements!). a) Short 1 share of XYZ at $100 and use some of the
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Q2) Start with $0 in your account (ignore margin requirements!). a) Short 1 share of XYZ at $100 and use some of the cash to buy a 100 strike call, investing the rest for 3 months at interest rater. How much cash do you have to invest? b) Construct profit and payoff graphs for this position (short stock + long call option) (ignoring stock borrow fees!). c) Instead (starting with $0 in your account), borrow enough cash to buy the 100 strike put. You will pay interest on the loan at 1% for 3 months. Construct profit and payoff graphs for this put option. d) How do your graphs from b) and c) compare? e) How does your answer to b) change if you include a stock borrow fee of 0.25% on the $100 of XYZ stock you borrowed? (Assume the stock borrow fee is paid at the end of the 3 month period,) Q2) Start with $0 in your account (ignore margin requirements!). a) Short 1 share of XYZ at $100 and use some of the cash to buy a 100 strike call, investing the rest for 3 months at interest rater. How much cash do you have to invest? b) Construct profit and payoff graphs for this position (short stock + long call option) (ignoring stock borrow fees!). c) Instead (starting with $0 in your account), borrow enough cash to buy the 100 strike put. You will pay interest on the loan at 1% for 3 months. Construct profit and payoff graphs for this put option. d) How do your graphs from b) and c) compare? e) How does your answer to b) change if you include a stock borrow fee of 0.25% on the $100 of XYZ stock you borrowed? (Assume the stock borrow fee is paid at the end of the 3 month period,)Step by Step Solution
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