If the stock makes a dividend payment before the expiration date, then the put-call parity relation is Value of call = value of put − share price + PV of dividend − PV of exercise price. None of the above. Value of call = value of put + share price + PV of dividend + PV of exercise price. Value of call = value of put + share price − PV of dividend − PV of exercise price. Value of call = value of put + share price + PV of dividend − PV of exercise price.

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 1Q: Define each of the following terms: a. Proxy; proxy fight; preemptive right; classified stock;...
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If the stock makes a dividend payment before the expiration date, then the put-call parity relation is

   

Value of call = value of put − share price + PV of dividend − PV of exercise price.

 

   

None of the above.

   

Value of call = value of put + share price + PV of dividend + PV of exercise price.

   

Value of call = value of put + share price − PV of dividend − PV of exercise price.

   

Value of call = value of put + share price + PV of dividend − PV of exercise price.

 

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