Assume the same underlying stock, same time to expiration, and same strike price for all derivatives in
Question:
Assume the same underlying stock, same time to expiration, and same strike price for all derivatives in this problem.
Which of the following must have the same profit as a floor coupled with a cap? Give your reasoning.
(A) Long stock
(B) Short stock
(C) Long straddle
(D) Short straddle
(E) None of the above
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C You can combine the payoff diagrams of a floor and cap and see that the ...View the full answer
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