Homework Problem: Assignment 1, Problem 3 Basic Diagrams for Basic Securities: Your boss wants...
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Homework Problem: Assignment 1, Problem 3 Basic Diagrams for Basic Securities: Your boss wants you to create some charts to display the potential benefits of basic securities. For each portfolio, draw both a payoff and profit diagram. 1. The purchase of H&B stock, SH&B at $5. 2. The shorting of H&B stock, Sh&B at $5. 3. The purchase and shorting of H&B stock, SH&B both at $5. 4. Explain why the graph in 3. has to look the way it looks. 5. Selling a bond for $X that has a face value of $2X. Homework Problem: Assignment 1, Problem 3 Basic Diagrams for Basic Securities: Your boss wants you to create some charts to display the potential benefits of basic securities. For each portfolio, draw both a payoff and profit diagram. 1. The purchase of H&B stock, SH&B at $5. 2. The shorting of H&B stock, Sh&B at $5. 3. The purchase and shorting of H&B stock, SH&B both at $5. 4. Explain why the graph in 3. has to look the way it looks. 5. Selling a bond for $X that has a face value of $2X
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