State the Basic Put-Call Parity Formula for European Options on a Non-Dividend Asset ▴ Learn

State the Basic Put-Call Parity Formula for European Options on a Non-Dividend Asset.

The basic put-call parity formula is: Call Price + (Strike Price Present Value of Risk-Free Rate) = Put Price + Underlying Asset Price. This can be rearranged to C + PV(K) = P + S, where C is the call price, P is the put price, S is the underlying asset price, and PV(K) is the present value of the strike price K.

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