Explanation

According to put-call parity for European options, the relationship is:

C + PV(K) = P + S

Where:

• C = Price of European call option
• P = Price of European put option
• S = Current price of the underlying asset
• PV(K) = Present value of the strike price (risk-free bond)

Rearranging the formula to solve for a long call position:

C = P + S - PV(K)

This means a long call (C) is equivalent to:

• Long put (P)
• Long asset (S)
• Short risk-free bond (-PV(K))

Therefore, option B is correct: long put plus long asset plus short risk-free bond.

Let's verify the other options:

• Option A: Long put + long asset + long risk-free bond → This would be C = P + S + PV(K), which is incorrect.
• Option C: Short put + short asset + long risk-free bond → This would be C = -P - S + PV(K), which is also incorrect.

The put-call parity relationship is fundamental in derivatives pricing and ensures that arbitrage opportunities do not exist between European options with the same strike price and expiration date.