Question: Which of the following statements is false?

A) Income Tax can be calculated by taking EBIT (earning before interest and tax) times (1- tax rate)

B) Overhead expenses are often allocated to the different business activities for accounting purposes

C) A capital budget lists the projects and investment that a company plans to undertake during the coming year

D) When sales of a new product displace sales of an existing product, the situation is often referred to as cannibalization

Question: Assume an investor contracts a portfolio by buying 2 shares of ABC stocks at a price 35$ per share, a put option with strike price 40$ on this stock and simultaneously selling a strike price 40$ on this stock. The premium for the put option is 1$ and the premium for the call option is 1.04$. Each option is based on one ABC stock (not bundle of 100) and each option has the same maturity date. What is the profit/losses of this portfolio when the market price of ABC stock si 37.74$ at the expiration of both options and you are liquidating the portfolio with no transaction costs.

The profit/losses of this portfolio is ___$ (4 decimals)