A Call Option Has an Exercise Price of $150

question 47

Multiple Choice

A call option has an exercise price of $150. At the option expiration date, the stock price could be either $100 or $200. Which investment would combine to give the same payoff as the stock?

• A)Lend PV of $100 and buy two calls.
• B)Lend PV of $100 and sell two calls.
• C)Borrow $100 and buy two calls.
• D)Borrow $100 and sell two calls.

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