If You Own a Call and a Put on a Stock

question 21

Multiple Choice

If you own a call and a put on a stock with the same exercise price and exercise date,your payoffs:

• A) will be positive only if the stock price rises.
• B) will be positive only if the stock price declines.
• C) will always be positive and will increase with the size of the stock price change.
• D) will always be positive but will be larger if the stock price is relatively stable.

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