Consider two european options call and put on the same, Ask an Expert

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Consider two European options, call and put, on the same non-dividend-paying stock. They have the same expiration T and strike price K. Portfolio A consists of a unit of call and a zero coupon bond paying K at T, Portfolio B of a unit of put and a share of the underlying stock.

a. Determine which portfolio performs better compare at T

b. What happens to the portfolios if the stock price drops to near zero?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92330679

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