Put-Call Parity Can Be Used to Show

question 22

Multiple Choice

Put-call parity can be used to show:

• A) how far in-the-money put options can get.
• B) how far in-the-money call options can get.
• C) the precise relationship between put and call prices given equal exercise prices and equal expiration dates.
• D) that the value of a call option is always twice that of a put given equal exercise prices and equal expiration dates.
• E) that the value of a call option is always half that of a put given equal exercise prices and equal expiration dates.

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Definitions:

Table Factors

Mathematical factors used in tables to simplify calculations for things like present values, loan repayments, or depreciation rates.

Present Values

The discounted value of an amount of money at a specific future date, considering a particular interest rate.

Debit Machinery

An accounting entry that reflects an increase in the value of machinery assets on the balance sheet.