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:

Cortices

The outer layers or regions of an organ or structure, such as the cerebral cortex in the brain or the cortex of plant roots and stems.

Cerebrum

The largest part of the brain responsible for voluntary activities, intelligence, memory, and emotional responses.

Corpus Callosum

A broad band of nerve fibers joining the two hemispheres of the brain, facilitating communication between them.

Cerebral Hemispheres

The two halves of the brain, each controlling different functions and processes, with the left hemisphere typically managing logic and language, and the right, creativity and spatial abilities.