13. Putcall parity (S21-2) Which one of the following statements is correct? a. Value of put +...
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13. Put–call parity (S21-2) Which one of the following statements is correct?
a. Value of put + present value of exercise price = value of call + share price.
b. Value of put + share price = value of call + present value of exercise price.
c. Value of put – share price = present value of exercise price – value of call.
d. Value of put + value of call = share price – present value of exercise price.
The correct statement equates the value of two investment strategies. Plot the payoffs to each strategy as a function of the share price. Show that the two strategies give identical payoffs.
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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