Business, 25.04.2020 01:02 batmanmarie2004

The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration?
A. Sell a call. B. Purchase a put. C. Sell a straddle. D. Buy a straddle.

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The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share f...

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