You Can Realize the Same Value as That Derived from Stock

question 18

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)sell a put and buy a call on a stock as well as invest at the risk-free rate of return.
• C)buy a call option and write a put option on a stock and also lend out funds at the risk-free rate.
• 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:

Water

A colorless, odorless, tasteless liquid that forms the seas, lakes, rivers, and rain, and is the basis of the fluids of living organisms.

Uni-

A prefix meaning "one" or "single," used to denote singularity or uniqueness in various terms.

Homeo-

A prefix in biology and medicine indicating similarity, sameness, or constancy.

Homeostasis

The ability of a living organism to maintain stable internal conditions despite changes in the external environment.