- CFA Exams
- CFA Level I Exam
- Study Session 16. Derivatives
- Reading 49. Basics of Derivative Pricing and Valuation
- Subject 9. Put-Call Parity

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**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.

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**User Contributed Comments**
1

User |
Comment |
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khalifa92 |
+ = Long - = Short |