Buying a Call Option, Investing the Present Value of the Exercise

question 40

Multiple Choice

Buying a call option, investing the present value of the exercise price in T-bills, and short-selling the underlying share is the same as

• A)buying a call and a put.
• B)buying a put and a share.
• C)buying a put.
• D)selling a call.

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Definitions:

Public Law

The area of law that governs the relationship between individuals and the state, including constitutional, administrative, and criminal law.

Statute

A written law passed by a legislative body at the federal or state level.

Common Law

A body of unwritten laws based on legal precedents established by the courts, used predominantly in England and countries influenced by English legal systems.

Hydraulic Fracturing

A process used in the oil and gas industry to increase the flow of oil or gas from a well by injecting high-pressure fluid into the surrounding rock.