To create a (long) synthetic stock, you should... A. Buy the call, deposit the present value...
To create a (long) synthetic stock, you should...
A. Buy the call, deposit the present value of the strike in a risk free bank account and write a put (for the same strike and expiration as the call) .
B. Buy the call take out a loan in the amount of PV(X) and buy a put (for the same strike and expiration as the call).
C. Sell a call, borrow the present value of the strike, and buy a put (for the same strike and expiration as the call)
D. Write a call, deposit the present value of the strike in a risk free bank account and buy a put (for the same strike and expiration as the call) .
Homework Answers
A. Buy the call, deposit the present value of the strike in a risk free bank account and write a put (for the same strike and expiration as the call) .
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To create a (long) synthetic stock, you should...
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