2. 24.

Put-Call Parity and Dividends [LO 25.1] The put-call parity condition is altered when dividends are paid. The dividend-adjusted put-call parity formula is:

where d is again the continuously compounded dividend yield.
1. What effect do you think the dividend yield will have on the price of a put option? Explain.
2. From Problem 23, what is the price of a put option with the same strike and time to expiration as the call option?

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Sxed + P = Ex et + C