You Find a Call and a Put with the Same

question 69

Multiple Choice

You find a call and a put with the same strike price and exercise date. The price of the put is greater than the price of the call. You know that:

• A) the call is in-the-money.
• B) the stock price is equal to the strike price.
• C) the put is in-the-money.
• D) one of the options is mis-priced since it is impossible for the call price to be equal to the put price.
• E) Insufficient information.

---

Definitions:

Free Cash Flows

This refers to the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It is an indicator of a company's financial flexibility.

Conglomerate Merger

A conglomerate merger occurs between companies operating in different industries, aimed at diversification and potential synergies.

Defensive Mergers

Defensive mergers are strategic actions taken by companies to fend off hostile takeovers, merge with competitors or acquire businesses in non-related industries to diversify their portfolio and reduce competition.

Corporate Valuation Method

It includes various techniques used to assess the total value of a company, incorporating its financial performance, assets, and market value.