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Which ONE of the following statements about financial engineering is FALSE? o If there are only call options and forward contracts available to a company,
Which ONE of the following statements about financial engineering is FALSE? o If there are only call options and forward contracts available to a company, but no put options, then the company can replicate the payoffs to a put-option holder by buying a forward and selling a call option. If there are only put options and forward contracts available to a company, but no call options, then the company can replicate the payoffs to a call-option holder by buying the forward and also buying a put option. (Tick this option if you think that none of the statements listed are false.) In general, given any two of the instruments (forward, put and call), the third can be synthesized. O If there are only call options and forward contracts available to a company, but no put options, then the company can replicate the payoffs to a put-option holder by selling a forward and buying a call option
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