Put-call parity explains why a change in interest rates by the Federal Reserve affects stock and option prices.

Question

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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 with the same strike prices and expiration dates. Changes in interest rates affect the cost of carry of holding a position in the underlying asset, which in turn influences the pricing of both options and the underlying stock. Therefore, when the Federal Reserve changes interest rates, it indirectly affects stock and option prices through this relationship.

Put-Call Parity Explains Why a Change in Interest Rates by the Federal