If the Observed Put Option Premium Is Less Than What

question 60

Multiple Choice

If the observed put option premium is less than what is suggested by the put-call parity equation, astute arbitrageurs could make a profit by ____ the put option, ____ the call option, and ____ the underlying currency.

• A) selling; buying; buying
• B) buying; selling; buying
• C) selling; buying; selling
• D) buying; buying; buying

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Definitions:

Chief Justice

The presiding judge in the supreme court of a country or state, representing the highest judicial authority.

Constitutionality

The quality or state of being in accordance with a nation's constitution, or the legality of actions measured against constitutional principles.

Civil Rights Bill

Legislation aimed at enforcing constitutional rights, particularly those relating to individuals' civil liberties and protections against discrimination.

Reconstruction

The period following the Civil War in the United States, focused on rebuilding the country and integrating Southern states back into the Union.