Draw payoff diagrams for each of the given portfolios

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Reference no: EM131316662

Draw payoff diagrams for each of the following portfolios (X = strike price):

a. Buy a call, with X = $50, and sell a call, with X = $60.

b. Buy a bond with a face value of $10, short a put, with X = $60, and buy a put, with X = $50.

c. Buy a share of stock, buy a put option, with X $50, sell a call, with X $60, and short a bond (i.e., borrow) with a face value of $50.

d. What principle do these diagrams illustrate?

Reference no: EM131316662

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