Under European Put-Call Parity, the Present Value of the Strike

question 51

Multiple Choice

Under European put-call parity, the present value of the strike price is equivalent to the present value of:

• A) the current value of the stock minus the call premium.
• B) the market value of the stock plus the put premium.
• C) a U.S. Treasury coupon bond with a face value equal to the strike price.
• D) a U.S. Treasury bill with a face value equal to the strike price.
• E) any risk-free security with a face value equal to the strike price and a coupon rate equal to the risk-free rate of return.

---

Definitions:

Matched-Pairs Sample

An experimental design technique in which subjects are paired based on certain criteria, and each pair is treated differently to compare the effects.

Frequency Distributions

A summary of data showing the number (or frequency) of observations in each category of a variable.

Population Median

The population median is the value that divides the population into two equal halves, with half of the population values being less than the median and the other half being greater.

Population Mean

The average of a set of values in the entire population.