I need some assistance with these assignment. risk financing and portfolio management Thank you in advance for the help!

I need some assistance with these assignment. risk financing and portfolio management Thank you in advance for the help! Section 2 provides a description of how an investor can hedge long and short positions in the stock using calls, puts, and option spreads. 2. Options Strategies as of the 1st of December 2011 This section describes how long and short positions in the stock can be hedged using puts, calls and spread options. The discussion begins with how a long position in the stock can be hedged and later focuses on how a short position can be hedged. a) Hedging a long Position A long position in a stock means that the investor has invested in the stock with the objective of profiting from prices increases. However, because the stock price behaves in a stochastic fashion, the investor cannot tell for sure whether the price will rise or fall. If the investor does not do anything and the price rises, then he will be better off. However, if the investor fails to hedge against price declines and the price ends up declining, then the investor runs the risk of losing all or some of his/her investment in the stock. Consequently, strategies have been developed which enables investors and portfolio managers to hedge against the risk that the price of a stock might fall. This can be done using calls, puts, and option spreads.