Chapter31: Capital Markets
Section: Chapter Questions
Problem 2E
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feb693397-ac90-4b49-867d-4f10f38f5694%2F31aedc8f-dc0d-4418-8c5e-905dbdd20ef9%2Fe8ztbk_processed.png&w=3840&q=75)
Transcribed Image Text: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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