Which portfolio matches a long call plus a short put at the same strike?
AShort share, lend K
BLong share, lend K
CLong put and long stock
DLong share, borrow K
Answer & Solution
Correct answer: D. Long share, borrow K
Both portfolios pay S(T) minus K at expiry, so they must cost the same without arbitrage.
Keep practising Option (Finance)
Browse all Option (Finance) questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
When is charm especially useful for a delta-hedger?Which Greek is most important for an at-the-money straddle?Speed measures the change in gamma with respect to what?Which Greek is also known as vega convexity?Which Greek is called delta decay?Gamma is classed as which kind of Greek?Which Greek measures sensitivity to the interest rate?Which Greek measures the time decay of an option?