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:

Service Rate

The speed at which a service provider or system can complete a task or service for its customers or processes.

Arrival Rate

In queueing theory, it refers to the average rate at which entities arrive and require service, often measured per time unit.

FCFS

First-Come, First-Served, a principle where the requests are processed in the order they were received, commonly used in service areas and scheduling.

Arrival Rate

The frequency at which entities, such as customers or data packets, arrive at a specific point or system over a defined period.