Put-call parity is based on which one of the following principles?
A)Binomial tree
B)Time value of money
C)No arbitrage
D)Normality of returns

Question

Quizplus · Accepted Answer

Put-call parity is based on the principle of no arbitrage, which states that if two securities have the same cash flows, they must be priced the same. Put-call parity arises from the fact that a long call option plus borrowing money is equivalent to a long put option plus owning the underlying asset. This relationship must hold in a no-arbitrage market.

Put-Call Parity Is Based on Which One of the Following