It is given that both a one-year put option and call option on the same underlying stock have a strike price of Y and a one-year zero coupon bond with a face value of Y. To replicate the long put position payoff with the same underlying stock, aninvestor needs toSelect one:O Short stock, short call and short bondO Short stock, long call and long bondO Long stock, long call and short bondO Long stock, long call and long bondO Long stock short call and long bond

Presented are each zero-coupon bond with a face value of y, a one-year option with a market price of…

Answered: It is given that both a one-year put…

It is given that both a one-year put option option year zero coupon bond with a face value of Y. To replicate the long put p

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

It is given that both a one-year put option and call option on the same underlying stock have a strike price of Y and a one-
year zero coupon bond with a face value of Y. To replicate the long put position payoff with the same underlying stock, an
investor needs to
Select one:
O Short stock, short call and short bond
O Short stock, long call and long bond
O Long stock, long call and short bond
O Long stock, long call and long bond
O Long stock short call and long bond

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