For a stock that pays no dividends, which of the following statements is most accurate?
A) Identical American call and put options have the same price.
B) An American call has a higher price than an identical American put if the strike price is the forward price of the stock for the maturity of the options.
C) An American call has a lower price than an identical American put if the strike price is the forward price of the stock for the maturity of the options.
D) Identical American call and put options have the same price if the options are struck at-the-money.

Question

Quizplus · Accepted Answer

For a stock that pays no dividends, put-call parity holds. Thus, the higher the strike price, the lower the call option price and the higher the put option price. If the strike price is the forward price of the stock, the call option price would be lower than the put option price. Therefore, choice C is the most accurate statement.

For a Stock That Pays No Dividends, Which of the Following