Question: [1] (Put Call Parity with the Present Value ofKnown Dividend D) Let D be the present value of the known dividend(s) on or prior to

[1](Put Call Parity with the Present Value ofKnown Dividend D) Let

[1](Put Call Parity with the Present Value ofKnown Dividend D) Let D be the present value of the known dividend(s) on or prior to time T, which is the expiration of a European option.

a)Using non-arbitrage argument, prove

whereis the underlying stock price;is the strike price;is the continuously compounded interest rate;is a European call option price; andis a European put option price.

b)Using non-arbitrage argument, prove

D be the present value of the known dividend(s) on or prior

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