​If the Observed Put Option Premium Is Less Than What

question 28

Multiple Choice

​If the observed put option premium is less than what is suggested by the put-call parity equation, astute speculators could make a profit by ____ the put option, ____ the call option, and ____ the underlying currency.

• A) ​selling; buying; buying
• B) ​buying; selling; buying
• C) ​selling; buying; selling
• D) ​buying; buying; buying

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Definitions:

Average Accounts Receivable

The average amount of money owed to a company by its customers for goods or services provided on credit over a specified period.

Inventory Turnover Ratio

A measure of how quickly a company sells and replaces its stock of goods within a given period.

Cost of Goods Sold

The total cost of materials and labor directly involved in producing goods or services sold during a period.

Beginning Merchandise Inventory

The value of goods on hand at the start of an accounting period for the purpose of sale in the course of business.