It Is Possible to Replicate an Investment in a Call

question 74

True/False

It is possible to replicate an investment in a call option by a levered investment in the underlying asset.

---

Definitions:

Logical Syllogisms

Reasoning structures that use deductive reasoning from two premises to arrive at a logical conclusion.

Make-Believe Animals

Fictional or imaginary creatures often found in stories, myths, or children's play, characterized by whimsical or fantastical features.

Gestalt Principle

A theory in psychology that proposes the human brain organizes visual elements into groups or unified wholes when certain principles are applied, such as similarity, proximity, continuity, and closure.

Similarity

Similarity refers to the cognitive process of recognizing shared attributes or characteristics among different objects, ideas, or phenomena, often facilitating categorization and understanding.