For European Options, the Value of a Call Minus the Value

question 43

Multiple Choice

For European options, the value of a call minus the value of a put is equal to

• A)the present value of the exercise price minus the value of a share.
• B)the present value of the exercise price plus the value of a share.
• C)the value of a share plus the present value of the exercise price.
• D)the value of a share minus the present value of the exercise price.

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Definitions:

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply by using the midpoint between two points on a curve instead of relying on the initial or final point alone.

Price Elasticity

An indicator of the degree to which the demand for a product reacts to shifts in its price, showing how susceptible demand is to price fluctuations.

Equation

A mathematical statement that asserts the equality of two expressions, usually written with an equals sign ("=").

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply by taking the average of the starting and ending prices and quantities.