Suppose That the Domestic Risk Free Rate Is R and Dividend

question 18

Multiple Choice

Suppose that the domestic risk free rate is r and dividend yield on an index is q.How should the put-call parity formula for options on a non-dividend-paying stock be changed to provide a put-call parity formula for options on a stock index? Assume the options last T years.

• A) The stock price is replaced by the value of the index multiplied by exp(qT)
• B) The stock price is replaced by the value of the index multiplied by exp(rT)
• C) The stock price is replaced by the value of the index multiplied by exp(-qT)
• D) The stock price is replaced by the value of the index multiplied by exp(-rT)

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The ability to fulfill one's own needs without external assistance, demonstrating independence and resourcefulness.

Isolation

The state of being separated from others, which can be physical or emotional, often leading to feelings of loneliness.

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A feeling of despair and pessimism about the future, believing that there are no solutions to problems or that goals cannot be achieved.

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