According to the Put-Call Parity Theorem, the Value of a European

question 67

Multiple Choice

According to the put-call parity theorem, the value of a European put option on a nondividend paying stock is equal to

• A)the call value plus the present value of the exercise price plus the stock price.
• B)the call value plus the present value of the exercise price minus the stock price.
• C)the present value of the stock price minus the exercise price minus the call price.
• D)the present value of the stock price plus the exercise price minus the call price.

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Definitions:

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus intangible assets and liabilities.

Sale

A sale involves the transaction of goods or services from seller to buyer in exchange for money or other compensation.

Asset

An asset held or managed by a person, business, or nation, anticipated to yield future advantages.

Cash Received

The total amount of cash collected by a company during a specific period, including revenues, loans, and investments.