Question: 2) a) Using the Put-Call Parity rule (C + PV(X)= P + S 0 ) show how you would construct a synthetic Put option trade

2) a) Using the Put-Call Parity rule (C + PV(X)= P + S₀ ) show how you would construct a synthetic Put option trade if for some reason a Put option was not available to trade. List the trades involved, and show that the net cash flows are exactly the same as those for a Put option using payoff tables.

b) Using the Put-Call Parity (C + PV(X)= P + S₀ ) show how you would construct a synthetic short position in the stock if for some reason you were not able to short the stock directly. List the trades involved, and show that the net cash flows are exactly the same as those for shorting the stock using payoff tables.

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