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:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Comprehensive Income

An inclusive income measurement that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Gross Amounts

The total amounts before any deductions are made, such as discounts, expenses, or taxes.

Statement of Comprehensive Income

A financial statement that shows all changes in equity during a period, including items not reflected in the net income.