Answer: long the put, long the asset, and short the bond.

## Explanation According to put-call parity, the relationship between European call and put options with the same strike price and expiration date is: **C + PV(K) = P + S** Where: - C = Price of call option - P = Price of put option - S = Current price of the underlying asset - PV(K) = Present value of the strike price (bond) Rearranging the put-call parity formula to solve for a long call position: **C = P + S - PV(K)** This means a long call position (C) can be replicated by: 1. **Long the put** (P) 2. **Long the asset** (S) 3. **Short the bond** (-PV(K)) Therefore, the correct replication strategy is: **long the put, long the asset, and short the bond**, which corresponds to option C. ### Why the other options are incorrect: - **Option A (long put, short asset, long bond)**: This would give us P - S + PV(K), which is not equal to C. - **Option B (short put, long asset, short bond)**: This would give us -P + S - PV(K), which is not equal to C. This question tests understanding of put-call parity and how to synthetically create option positions using other instruments.

Author: LeetQuiz .