According to Put-Call Parity, a Put Option Can Be Replicated

question 81

Multiple Choice

According to put-call parity, a put option can be replicated by:

• A) buying a call, selling the underlying stock, and lending at the risk-free rate.
• B) selling a call, selling the underlying stock, and lending at the risk-free rate.
• C) buying a call, buying the underlying stock, and borrowing at the risk-free rate.
• D) selling a call, buying the underlying stock, and borrowing at the risk-free rate.
• E) buying a call, selling the underlying stock, and borrowing at the risk-free rate.

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Definitions:

Closing

The process of finalizing accounts at the end of an accounting period to prepare them for the next period.

Post-closing Trial Balance

A list of all permanent accounts and their balances after closing entries are made, used to check the balance and prepare for the new accounting period.

Proper Form

Compliance with established rules and guidelines, ensuring correctness in structure or procedure.

Closing

The process at the end of an accounting period where all financial statements are finalized and all temporary accounts are closed to prepare for the next accounting period.