Which of the following statements are true:

Which of the following statements are true:
A . Selling a call + Selling a put = Buying the stock + Bank deposit
B . Buying a call + Bank Deposit = Buying the stock + Selling a put
C . Buying a call + Selling a put = Buying the stock + Bank deposit
D . Buying a call + Bank Deposit = Buying the stock + Buying a put

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Answer: D

Explanation:

The put-call parity can be expressed as:

Call C Put = Spot C PV of exercise price

Note that a negative sign above means a short position. The ‘term PV of exercise price’ is the same as a bank deposit placed today equivalent to the PV of the exercise price so that we will have the cash flow on the exercise date to exercise the option.

Therefore only Choice ‘d’ is the correct answer as rearranging the above gives us Buying a call + Bank Deposit = Buying the stock + Buying a put. Choice ‘d’ is therefore the correct answer.