Consider a portfolio involving (among other things) one year options on the some ETF. The payoffs on this portfolio in one year are as follows:

-- if the ETF value is 0, the payoff is 0,

-- if the value is 12, the payoff is 12,

-- if the ETF is worth 25, the payoff is 12,

-- if the TF is worth more than 25, the payoff will increase, dollar for dollar, above 12.

The payoff diagram is continuous and iecewise linear.

Which of the following describes this portfolio?

Multiple Choice

• Call( X=12) + Call(X=25)

• Stock +Put(x=12) + Call(X=25)

• Stock - Call(X=12)+Call (X=25)

• One year zero coupon bond with face value 12 - Put(X=12)+Call(X=25)

• Both c and d are correct.