If an Actual Put Option Premium Is Less Than What

question 58

True/False

If an actual put option premium is less than what is suggested by the put-call parity relationship, arbitrage can be conducted.

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Definitions:

Face Value

Face value is the nominal value or dollar value printed on a security or a bond, representing the amount to be repaid at maturity.

Semi-Annual Coupon

A type of bond payment made twice a year to bondholders, representing interest payments on the bond's face value.

Yield To Maturity

The total expected return on a bond if held until its maturity date, taking into account both the interest payments and any gain or loss if the bond was purchased at a discount or premium.

Newspaper

A printed publication consisting of news articles, editorials, and advertisements, typically published daily or weekly.