Option Q.docx - 1 Figure 1 depicts the A position diagram...

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1. Figure 1 depicts the:
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A. position diagram for the buyer of a call option. B. profit diagram for the buyer of a call option. C. position diagram for the buyer of a put option. D. profit diagram for the buyer of a put option. 2.Which of the following investors would be happy to see the stock price rise sharply? I) An investor who owns the stock and a put option; II) An investor who has sold a put option and bought a call option; III) An investor who owns the stock and has sold a call option; IV) An investor who has sold a call option A. I and II only B. III and IV only C. III only D. IV only 3. Suppose you buy a call and lend the present value of its exercise price. You could match the payoffs of this strategy by: A. buying the underlying stock and selling a call. B. selling a put and lending the present value of the exercise price. C. buying the underlying stock and buying a put. D. buying the underlying stock and selling a put.
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