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2.Which of the following is true?
A.A long call is the same as a short put
B.A short call is the same as a long put
C.A call on a stock plus a stock the same as a put
D.None of the above
A.A long call is the same as a short put
B.A short call is the same as a long put
C.A call on a stock plus a stock the same as a put
D.None of the above
Answer: D
None of the statements are true. Long calls, short calls, long puts, and short puts all have different payoffs as indicated by Figure 10.5. A put on a stock plus the stock provides a payoff that is similar to a call, as explained in Chapters 11 and 12. But a call on a stock plus a stock does not provide a similar payoff to a put.
None of the statements are true. Long calls, short calls, long puts, and short puts all have different payoffs as indicated by Figure 10.5. A put on a stock plus the stock provides a payoff that is similar to a call, as explained in Chapters 11 and 12. But a call on a stock plus a stock does not provide a similar payoff to a put.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015