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Asset and Liability Management: The Banker’s Guide to Value Creation and Risk Control, Second Edition by Youssef F. Bissada, Jean Dermine

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Payoffs

Figure 14.2 illustrates the payoffs of a financial future transaction. The dotted line represents the contract to buy (a so-called long position). A profit is made when the price of the underlying instrument goes up.

Figure 14.2. The payoffs of a financial future transaction

The solid line shows the result of the contract to sell (a short position). A profit is made when the price of the underlying instrument goes down.

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