The Put-Call Parity Theorem

question 29

Multiple Choice

The put-call parity theorem

• A)represents the proper relationship between put and call prices.
• B)allows for arbitrage opportunities if violated.
• C)may be violated by small amounts, but not enough to earn arbitrage profits, once transaction costs are considered.
• D)All of the options
• E)None of the options

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Definitions:

Extinction

In psychology, it refers to the gradual weakening and disappearance of a conditioned response; in biology, it signifies the permanent end of an organism or species.

Behavior Modification

The use of reward and punishment to alter behavior, based on the principles of operant conditioning.

Behavior Frequency

The count of how often a specific behavior or action is performed over a set period of time.

Variable Ratio Schedule

A reinforcement schedule in which the number of responses required for a reward varies, often leading to high and steady rates of response.