Given the (1)exercise Price E,(2)time to Maturity T,and (3)European Put-Call

question 30

Multiple Choice

Given the (1) exercise price E,(2) time to maturity T,and (3) European put-call parity,the present value of E plus the value of the call option is equal to the:

• A)current market value of the stock.
• B)present value of the stock minus the value of the put.
• C)value of the put minus the market value of the stock.
• D)value of a risk-free asset.
• E)stock value plus the put value.

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Definitions:

Marginal Utility

The additional satisfaction or utility that a consumer receives from consuming an additional unit of a good or service.

Product Z

A hypothetical product used in discussions or examples when no specific product is being referenced.

Consumer's Income

The total amount of income available to an individual or household for spending on goods and services.

Expected-Rate-of-Return Curve

A graphical representation showing the expected returns of an investment as a function of varying degrees of risk.