Suppose You Use Put-Call Parity to Compute a European Call

question 41

Multiple Choice

Suppose you use put-call parity to compute a European call price from the European put price,the stock price,and the risk-free rate.You find the market price of the call to be less than the price given by put-call parity.Ignoring transaction costs,what trades should you do?

• A)buy the call and the risk-free bonds and sell the put and the stock
• B)buy the stock and the risk-free bonds and sell the put and the call
• C)buy the put and the stock and sell the risk-free bonds and the call
• D)buy the put and the call and sell the risk-free bonds and the stock
• E)none of the above

---

Definitions:

Malnutrition

A condition that results from eating a diet which does not supply a healthy amount of one or more nutrients or provides too much of a nutrient.

Brain

The organ located in the head of an organism that coordinates its actions and sensory information by transmitting signals to and from different parts of its body.

Head-sparing

A concept in pediatric development referring to the body's prioritization of nourishing the brain over other organs during periods of malnutrition.

Co-sleeping

The practice where babies and young children sleep close to one or both parents, rather than in a separate room.