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It is alleged that terrorists short-sell shares in companies just before terrorist acts are committed against the company. a) What does it mean to sell
It is alleged that terrorists short-sell shares in companies just before terrorist acts are committed against the company. a) What does it mean to sell a share short (short sale)? b) What is the motivation for such short sales? c) Assume now that short selling is prohibited, but that options are traded on the stock of a terrorist target. Explain in as much detail as possible how can obtain the same cash flow from a particular portfolio of options as from a short sale on the stock.
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