Solution-European put-call parity ought to apply

European put-call parity ought to apply

Reference no: EM132569416

You observe the following prices in a situation in which European put-call parity ought to apply: Put price $0.25, Call price $0.11, Share price $2.00, Exercise price $2.00, Term to expiry 4 months, and risk-free interest rate 1% per month (compounded monthly). The prices of these options and the share price suggest that:

Reference no: EM132569416

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European put-call parity ought to apply

Reference no: EM132569416

Reference no: EM132569416

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