Question
Please help don't have much time for this! Will upvote thanks :) Under the strategy of short-selling, investors sell the stocks they have borrowed to
Please help don't have much time for this! Will upvote thanks :)
Under the strategy of short-selling, investors sell the stocks they have borrowed to a lender in the hope that the prices of those stocks will decline. The goal is to make a profit by buying back the shares at a lower price before returning them to the lender.
Suppose the US Congress passes a bill that prohibits short selling of stocks, making it impossible for investors to make a profit when stock prices fall. However, the US Congress places no restrictions on financial options. Using Put-Parity, what advice do you give to investors who want to short certain stocks? In other words, come up with a strategy that describes how to achieve the equivalence of a short sale using options and leverage. Create a payoff table for your strategy to confirm / validate your answer.
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