A Call Option Has an Exercise Price of $150

question 48

Multiple Choice

A call option has an exercise price of $150. At the final exercise date, the stock price could be either $100 or $200. Which investment would combine to give the same payoff as the stock?

• A) Lend PV of $100 and buy two calls
• B) Lend PV of $100 and sell two calls
• C) Borrow $100 and buy two calls
• D) Borrow $100 and sell two calls

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