Put–Call Parity and Dividends [LO1] The put–call parity condition is altered when dividends are paid. The dividend-adjusted put–call parity formula is:
where d is again the continuously compounded dividend yield,
a. What effect do you think the dividend yield will have on the price of a put option? Explain.
b. From the previous question, what is the price of a put option with the same strike and time to expiration as the call option?
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