You Purchase a Call Option and a Put Option on the Shares

question 45

Multiple Choice

You purchase a call option and a put option on the shares of a company.The sticker price and expiration date for the options is equal.What is the best description of the combined payoff diagram for the combination of the two options?

• A) an upward sloping straight line
• B) a downward sloping straight line
• C) a v-shaped diagram with the kink at the strike price of the options
• D) an upside down v-shaped diagram with the kink at the strike price of the options

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Definitions:

Black Coat Color

A genetic trait resulting in a dark pigmentation of the skin, fur, or feathers in various animals, often due to the presence of melanin.

Spotted

Marked with spots; a pattern that can occur naturally in skins, coats, leaves, etc., often for camouflage or signaling.

Incomplete Dominance

Inheritance pattern in which one allele is not fully dominant over another, so the heterozygous phenotype is an intermediate blend between the two homozygous phenotypes.

Heterozygotes

Individuals having two different alleles at a locus, resulting in a variation of a genetic trait.