A Short Forward Contract on an Asset Plus a Long

question 13

Multiple Choice

A short forward contract on an asset plus a long position in a European call option on the asset with a strike price equal to the forward price is equivalent to

• A) A short position in a call option
• B) A short position in a put option
• C) A long position in a put option
• D) None of the above

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Definitions:

Liberal Internationalism

Woodrow Wilson’s foreign policy theory, which rested on the idea that economic and political freedom went hand in hand, and encouraged American intervention abroad in order to secure these freedoms globally.

Entangling Alliances

Complex foreign alliances that can draw a country into conflicts not directly related to its own interests, often criticized for potentially limiting a country's independence.

Dollar Diplomacy

A foreign policy strategy used by the United States in the early 20th century, aiming to influence and protect its economic interests abroad through the use of financial power.

Ideology

A system of ideas and ideals, especially one that forms the basis of economic or political theory and policy.