Answer the following questions about compound options: (a) What put-call parity relationship exists between the price of
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Answer the following questions about compound options:
(a) What put-call parity relationship exists between the price of a European call on a call and a European put on a call? Show that the formulas given in the text satisfy the relationship.
(b) What put-call parity relationship exists between the price of a European call on a put and a European put on a put? Show that the formulas given in the text satisfy the relationship.
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