You Can Realize the Same Value as That Derived from Stock

question 87

Multiple Choice

You can realize the same value as that derived from stock ownership if you:

• A) sell a put option and invest at the risk-free rate of return.
• B) buy a call option and write a put option on a stock and also borrow funds at the risk-free rate.
• C) sell a put and buy a call on a stock as well as invest at the risk-free rate of return.
• D) lend out funds at the risk-free rate of return and sell a put option on the stock.
• E) borrow funds at the risk-free rate of return and invest the proceeds in equivalent amounts of put and call options.

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Definitions:

Letterhead

The heading at the top of a sheet of letter paper, usually consisting of a name and an address, and often a logo.

Limited Partner

An investor in a partnership who is not directly involved in its daily operations and whose liability is limited to the amount invested.

Capital Contribution

Funds or assets provided by owners or shareholders to increase a company's equity.

Partners' Interests

Refers to the stakes or shares that partners have in a partnership, encompassing financial investment, management decisions, and profit-sharing.