Share A is currently priced at $11 while share B is priced at $14. The hedge fund currently does not hold any positions in any of the two shares. (a) Describe the strategy that the hedge fund should pursue at once (t=0) if it forecasts that the difference between the prices will increase in the future. Explain your answer. (5 marks) (b) Assume the hedge fund is fast enough in arranging the borrowing of shares to benefit from the prices movements mentioned above. Seven days after the implementation of the strategy described in (a) share A is priced at $13 while share B is priced at $16. The hedge fund undoes the positions taken previously. Represent on a time line the part of the strategy that involved legal short- selling. All transactions should appear, including the transactions with the original owner of the shares. Settlement occurs two days after trading (T+2). (5 marks) (c) Draw the table of cash flows associated with the hedge fund's strategy described in (a) for the prices defined in (b) and for a parcel of 10 shares of A and 10 shares of B. Calculate the profit of the hedge fund's strategy. Assume that the security borrowing fees are zero and that settlement occurs two days after trading (T+2). (5 marks) Share A is currently priced at $11 while share B is priced at $14. The hedge fund currently does not hold any positions in any of the two shares. (a) Describe the strategy that the hedge fund should pursue at once (t=0) if it forecasts that the difference between the prices will increase in the future. Explain your answer. (5 marks) (b) Assume the hedge fund is fast enough in arranging the borrowing of shares to benefit from the prices movements mentioned above. Seven days after the implementation of the strategy described in (a) share A is priced at $13 while share B is priced at $16. The hedge fund undoes the positions taken previously. Represent on a time line the part of the strategy that involved legal short- selling. All transactions should appear, including the transactions with the original owner of the shares. Settlement occurs two days after trading (T+2). (5 marks) (c) Draw the table of cash flows associated with the hedge fund's strategy described in (a) for the prices defined in (b) and for a parcel of 10 shares of A and 10 shares of B. Calculate the profit of the hedge fund's strategy. Assume that the security borrowing fees are zero and that settlement occurs two days after trading (T+2)