For Each of the Following Option and Securities Combinations Show

question 6

Essay

For each of the following option and securities combinations show what the payoff would be when the option expires.Assume that each option has the same exercise price and expiration date.
a.Buy a call and invest the present value of the exercise price in a bank deposit
b.Buy a share and a put option on the share
c.Buy a share,buy a put option on the share,and sell a call option on the share
d.Buy a call option and a put option on the share

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Definitions:

Limited Capacity

Refers to the finite amount of information or resources that a system or individual can handle at any given time.

Elaborative Rehearsal

A memory technique that involves thinking about the meaning of the term to be remembered, instead of merely repeating the term to oneself.

Maintenance Rehearsal

A cognitive process involving the repetition of information to keep it within working memory or to encode it for long-term memory.

Retrograde Amnesia

A condition in which people lose the ability to access memories they had before a brain injury.