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Equation for the payoff of karen portfolio

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The current stock price is $80. The stock does not pay dividends. All contracts mature in one year. The annual effective rate of interest is 3.5%, ??0,?? =82.8. Karen short-sells two shares of the stock and takes a long position in a forward contract to buy one share of the stock and invests $200 in zero coupon bonds.

(a) Write the equation for the payoff of Karen's portfolio and draw its graph.

(b) Write the equation for the profit of Karen's portfolio and draw its graph.

Reference no: EM132796056

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