- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 9. Option Replication Using Put-Call Parity
- Subject 1. Put-Call Parity
CFA Practice Question
A description least likely to explain put-call parity is ______.
B. a put is equivalent to a long call, a long position in the underlying asset, and a long position in the risk-free asset
C. a call is equivalent to a long put, a long position in the underlying asset, and a short position in the risk-free asset
A. a fiduciary call option strategy and a protective put option strategy for an underlying asset are equal in value
B. a put is equivalent to a long call, a long position in the underlying asset, and a long position in the risk-free asset
C. a call is equivalent to a long put, a long position in the underlying asset, and a short position in the risk-free asset
Correct Answer: B
The put requires a short position in the underlying rather than a long position.
User Contributed Comments 1
| User | Comment |
|---|---|
| khalifa92 | + = Long - = Short |