Assume:
share price= $110
call price= $14
Put price= $5
interest rate= 5% compounded continuously
Is put call parity present and calculate arbitrage profits?
In the question there’s no mention of a strike price, so I assumed its at the money and used $110 as the strike price. However, the answer indicates the strike price used was $105. Is there something I’m missing?
it does say in a follow up question; what will be the final outcome if St<105 or St>105?
could it be due to that?