Buying the Stock and the Put Option on the Stock

question 7

Multiple Choice

Buying the stock and the put option on the stock provides the same payoff as

• A)investing the present value of the exercise price in T-bills and buying the call option on the stock.
• B)short-selling the stock and buying a call option on the stock.
• C)writing (selling)a put option and buying a call option on the stock.
• D)a T-bill.

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Definitions:

Normal Time

The time typically required to accomplish a task under normal working conditions, factored into planning and scheduling processes.

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