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You are long two calls on the same share of stock with the same exercise date. The exercise price of the first call is $40
You are long two calls on the same share of stock with the same exercise date. The exercise price of the first call is $40 and the exercise price of the second call is $60. In addition, you are short two otherwise identical calls, both with an exercise price of $50. Plot the payoff of this combination as a function of the stock price on the exercise date. What are your expectations about the stocks price movement? (5 points)
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