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Please mark the only correct statement about options: a
Please mark the only correct statement about options:
a. Being short a put generates a premium for the writer of the put with an unlimited downside potential
b. the payoff of a stock plus a call is identical to the payoff resulting from being long a European put plus a zero-coupon bond (whose face value equals the strike price)
c. the payoff of a stock plus a put is identical to the payoff resulting from being long a European call plus a zero-coupon bond (whose face value equals the strike price)
d. Being short a call generates a premium for the writer of the call with a limited downside potential
Expert Solution
c. the payoff of a stock plus a put is identical to the payoff resulting from being long a European call plus a zero-coupon bond (whose face value equals the strike price)
this forms the basis of call put parity
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