Put-call parity
How can I solve this? Thank you!:
"Given the following put-call parity for European options:
Ct + K/(1+r) = St + Pt
Suppose stock Y is currently traded at $10 and its 1-year put option with a strike of $9 is currently traded at $1, what is the price of a 1-year call option with a strike of $9 written on stock Y given a 1-year risk-free interest rate of 0%?"
"Given the following put-call parity for European options:
Ct + K/(1+r) = St + Pt
Suppose stock Y is currently traded at $10 and its 1-year put option with a strike of $9 is currently traded at $1, what is the price of a 1-year call option with a strike of $9 written on stock Y given a 1-year risk-free interest rate of 0%?"
The question gives you the values for K, r, S and P, so rearrange equation for C and input values.
If this doesn’t make sense, I’d revisit what put-call parity means and why this relationship should hold. Good luck!
If this doesn’t make sense, I’d revisit what put-call parity means and why this relationship should hold. Good luck!
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