Put-Call Parity Suggests That

question 34

Multiple Choice

Put-call parity suggests that

• A)the sum of the prices of a stock and a call equal zero
• B)the sum of the prices of a put and a call equal zero
• C)the sum of the prices of a stock, a call, a put, and a bond equal zero
• D)sum of the prices of a stock and a put must equal the sum of the prices of a call and a discounted bond with the maturity date as the expiration date of the options

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Definitions:

Stock Price

Stock price is the cost of purchasing a share of a company's stock, reflecting the value the market attributes to the company.

Independent Variable

A factor that is intentionally changed to see its impact on an outcome variable in a study.

Dependent Variable

The variable in an experiment or study whose changes are determined by the presence or variation of one or more independent variables.

Mediating Variable

A type of variable in statistical analysis that explains the relationship between two other variables, often indicating the mechanism through which an effect occurs.