The most critical assumption of put-call parity is that
A) both options may have different exercise prices, but the same expiration dates
B) both options have the same exercise prices and the same expiration dates
C) both options will produce the same profit on the stock as well as a risky bond
D) both options will produce the same profit on the stock as well as a risk-free bond
E) both options will produce the same profit on the stock as well as another risky asset

Question

Quizplus · Accepted Answer

Put-call parity is based on the relationship between the price of European put and call options with the same strike price and expiration date. This relationship ensures that the positions are equivalent given the same exercise conditions.

The Most Critical Assumption of Put-Call Parity Is That