You can realize the same value as that derived from stock ownership if you:
A)sell a put option and invest at the risk-free rate of return.
B)buy a call option and write a put option on a stock and also borrow funds at the risk-free rate.
C)sell a put,buy a call,and buy a zero-coupon bond.
D)lend out funds at the risk-free rate of return and sell a put option on the stock.
E)borrow funds at the risk-free rate of return and invest the proceeds in equivalent amounts of put and call options.

Question

Quizplus · Accepted Answer

Buying a call and selling a put give you the right to buy the stock at a fixed price, which is the same as owning the stock. Buying a zero-coupon bond provides a guaranteed return without any risk. Therefore, by combining these three investments, you can realize the same value as that derived from stock ownership.

You Can Realize the Same Value as That Derived from Stock