You Can Realize the Same Value as That Derived from Stock

question 28

Multiple Choice

You can realize the same value as that derived from stock ownership if you

• A)sell a put option and invest at the risk-free rate of return.
• B)sell a put and buy a call on the stock as well as invest at the risk-free rate of return.
• C)buy a call option and write a put option on a stock and also lend out funds at the risk-free rate.
• D)lend out funds at the risk-free rate of return and sell a put option on the stock.
• E)borrow funds at the risk-free rate of return and invest the proceeds in equivalent amounts of put and call options.

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Definitions:

Cubic Polynomial

A polynomial of degree three, expressed in the form ax^3 + bx^2 + cx + d.

Quadratic Polynomial

A polynomial of degree 2, typically in the form of ax^2 + bx + c.

Scientific Notation

A way of expressing numbers that are too big or too small to be conveniently written in decimal form, using powers of ten.

Binomial

An algebraic expression of the sum or the difference of two terms.