If the interest rate is positive,then which of the following statements is valid for at-the-money call and put options written on the same underlying stock for the same strike and maturity?
A)The call is worth more than the put.
B)The call price is equal to the put price.
C)The call price is less than the put price.
D)More information is needed to determine the relative values of the call and put.

Question

Quizplus · Accepted Answer

Under the put-call parity, the value of a call option minus the value of a put option equals the current stock price minus the present value of the strike price. If the interest rate is positive, the present value of the strike price is less than its face value, making the call option worth more than the put option for the same strike price and maturity.

If the Interest Rate Is Positive,then Which of the Following