Draw a payoff diagram for the following portfolios: a. Buy a bond with a face value of

Question:

Draw a payoff diagram for the following portfolios:

a. Buy a bond with a face value of $80, buy a call with X = $80, and sell a put with X = $80.

b. Buy a share of stock, buy a put with X = $80, and sell a call with X = $80.

c. Buy a share of stock, buy a put with X = $80, and sell a bond with a face value of $80.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...