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1) Describe with a graph the payoff from the following portfolio: a long forward on some asset and a long put option on the same asset with the same maturity as the forward contract, and a strike price that is equal to the forward price at the time the portfolio is set up. What short selling means?

2) A trade buys a Euro call option and sells a Euro put option at the same time. The Options have the same underlying assets, strike price and maturity. Describe the trader’s position and visualize the payoff of this portfolio. Under what (mathematical) condition does the price of the call option equal the price of the put option?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91568726

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