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Assume that you observe the following variables relating to a non-dividend-paying stock: S = $39, X = $39, r = .08/annum, T = .25 years,

Assume that you observe the following variables relating to a non-dividend-paying stock:

S = $39, X = $39, r = .08/annum, T = .25 years,

C^E = $2.00, P^E = $4.50

Demonstrate that a violation of Put-Call Parity exists.

How should this violation be exploited?

Clearly list every individual action step to be taken today and every individual action step to be taken 3 months from today.

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