Consider a Portfolio Comprised of a Short Call and a Short

question 1

Multiple Choice

Consider a portfolio comprised of a short call and a short put,both options written on the same stock,same strike,and for the same maturity.Which of the following is valid?

• A)The intrinsic value of the portfolio is zero.
• B)The time value of the portfolio is zero.
• C)The insurance value of the portfolio is negative.
• D)All of the above.

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Definitions:

Dependent Variable

The variable in an experiment that is expected to change in response to manipulations of the independent variable.

Control Group

In experimental research, a group of subjects who do not receive the experimental treatment and are used as a benchmark to measure the effect of the treatment.

Experimental Group

The group in a scientific study that receives the intervention or treatment under investigation.

Independent Variable

In an experimental setting, the variable that is manipulated or changed to observe its effect on the dependent variable.