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Draw the payoff diagram for combined position

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A trader buys a 1 year forward contract on the S&P 500 index at a price of 2100 and also buys a put on the S&P 500 index with a strike price of $2100 and a time to maturity of one year.

a. Draw the payoff diagram for this combined position

b. What does this remind you of?

c. What if the put cost $80. Ignoring the time value of money repeat part (a) above, taking into account the premium ($80)

Reference no: EM133122677

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