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

question 58

Multiple Choice

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

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

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Definitions:

Import Licenses

Official permissions required by governments for the importation of certain goods, often used to control the volume and types of goods entering a country.

U.S. Trade Protection

Policies and measures implemented by the United States government to protect its industries from foreign competition, including tariffs, quotas, and subsidies.

Import Quota

A government-imposed limit on the quantity or value of goods that can be imported into a country.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product demanded, leading to market stability.