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Questions are NOT related to each other 1. a) . Sketch the terminal payoff diagram of a forward with expiration T and forward price K.

Questions are NOT related to each other

1. a) . Sketch the terminal payoff diagram of a forward with expiration T and forward price K. If you short this forward, what is the terminal payoff diagram?

b) If you believe that the market price of a stock will stay at approximately the same price for a period of time, can you still make money from the stock if your hunch is correct? Explain your answer.

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