Q655
When two portfolios have identical values and payoffs then it is classified as
A.
binomial parity relationship
B.
put parity relationship
C.
put option parity relationship
D.
put call parity relationship
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
When two portfolios have identical values and payoffs then it is classified as put call parity relationship. Put-call parity is a principle that defines the relationship between the price of European put options and European call options of the same class, that is, with the same underlying asset, strike price, and expiration date.