If You Combine a Long Stock Position with Buying an at the Money

question 47

Multiple Choice

If you combine a long stock position with buying an at the money put option the resulting net payoff profile will resemble the payoff profile of a _______.

• A) long call
• B) short call
• C) short put
• D) long put

---

Definitions:

Simple Interest

Interest calculated on the principal amount only, not on accrued interest from previous periods.

Compounded Annually

Interest on an investment that is calculated at the end of the year on both the initial principal and the accumulated interest from previous periods.

Invests

The initiative of funneling financial capitals in order to gain profits or generate income.

Trust Fund

A legal arrangement where assets are held and managed by one party for the benefit of another, often used for inheritance, to manage charity donations, or to protect assets.