(a) (b) (c) Retail investors have been buying huge amounts of Bed Bath and Beyond (BBBY)...
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(a) (b) (c) Retail investors have been buying huge amounts of Bed Bath and Beyond (BBBY) stock, and today the price skyrocketed to $30.42 per share. You believe the stock is over valued and decide to short 10 shares of BBBY. One month later the price crashed back down to $9.42. Assume an interest rate of r = 0.01 (1%) per annum. (1.50 Points) What is your breakeven price? What is your payoff and profit per share in this scenario? Create a payoff and profit diagram for this transaction. Be sure to label all axis, and to indicate the breakeven point. (a) (b) (c) Retail investors have been buying huge amounts of Bed Bath and Beyond (BBBY) stock, and today the price skyrocketed to $30.42 per share. You believe the stock is over valued and decide to short 10 shares of BBBY. One month later the price crashed back down to $9.42. Assume an interest rate of r = 0.01 (1%) per annum. (1.50 Points) What is your breakeven price? What is your payoff and profit per share in this scenario? Create a payoff and profit diagram for this transaction. Be sure to label all axis, and to indicate the breakeven point.
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To calculate the breakeven price payoff and profit per share we need to consider the short position ... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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