A Standard (Black-Scholes)European Option Is Equivalent to a Combination of a Down-And-Out

question 31

True/False

A standard (Black-Scholes)European option is equivalent to a combination of a down-and-out call plus a down-and-out put.

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Definitions:

Mortgagee

The lender or financial institution in a mortgage agreement, to whom the property is technically titled until the mortgage is fully paid off by the borrower.

Commercial Facilities

Premises or buildings used for commercial activities, such as retail stores, offices, or warehouses.

Private Nuisance

The use of property in such a way that it foreseeably interferes with a neighbour’s enjoyment of her property

Land Titles Office

A government office that registers legal documents relating to the ownership and boundaries of property, ensuring legal ownership.