Miss Molly, your eccentric (and very wealthy) aunt, wants you to explain something to her. Recently, at the Stable Club, she heard something fantastic. Her friend Rita said that there is a very interesting way to combine shares, puts, calls, and T-bills. Rita claims that having a share of stock and a put is the same as having a call and a T-bill. Miss Molly cannot believe it. Using the following information for Blue Northern Enterprises, show her that Rita is correct.

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Stock price Put price Call price Strike price for both options Options expire in One-year interest rate $110 $5 $15 $105 1 year 5%