A Contingent-Pay Option Is Replicated by Which of the Following

question 59

Multiple Choice

A contingent-pay option is replicated by which of the following combinations?

• A)long an ordinary call and long an ordinary put
• B)long an ordinary call and short a cash-or-nothing call
• C)long an ordinary call and short an asset-or-nothing call
• D)long an ordinary call and long an equity forward
• E)long an ordinary call and long a risk-free bond

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