The Value of a Risk-Free Bond Can Be Duplicated by Combining

question 328

Multiple Choice

The value of a risk-free bond can be duplicated by combining a risky bond with a _____ option on the assets of the firm with a _______ maturity date and a strike price _____ to the face value of the
Bond.

• A) Put; matching; equal to
• B) Call; matching; equal to
• C) Put; later; lower than
• D) Call; later; equal to
• E) Put; shorter; greater than

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