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Practical Application: Set up a 1 - for - 1 outperformance strategy in your account Stock A is trading at $ 7 5 . Stock

Practical Application: Set up a 1-for-1 outperformance strategy in your account
Stock A is trading at $75. Stock B is trading at $50. We think A is a better stock than B. How can we profit from our view?
We will need \Delta =75/50=1.5 shares of #23 per 1 share of #24 to set up the trade.
We #25300 shares of A and #26 #27 shares of B.
Based on this context, please answer the following three questions.
Scenario 1(Good). A goes up by 20% while B goes up by 10%.
Our dollar gain on A is $
Our dollar loss on B is $
Our net gain is $ #28
Scenario 2(Good). A goes down by 10% while B goes down by 20%.
Our dollar loss on A is $
Our dollar gain on B is $
Our net gain is $ #29
Scenario 3(Bad). A goes down by 20% while B goes down by 10%.
Our dollar loss on A is $ #30
Our dollar gain on B is $ #31
Our net loss is $ #32

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