A Put and a Call Both Have the Same Maturity

question 43

Multiple Choice

A put and a call both have the same maturity and both have an exercise price which is equal to the current stock price.The interest rate is 5%.Which option should sell for a higher price?

• A) the put.
• B) both should sell for the same price.
• C) the call.
• D) can't say without knowing the variability of the stock.

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Definitions:

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.

Fiscal Period

A specific time period used for accounting purposes and financial reporting, typically a year, broken into quarters or months.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to update account balances before preparing financial statements.