Question: B. Demonstrate how a butterfly spread can be created from European call options. Then show how it can be created from European put options. (You

 B. Demonstrate how a butterfly spread can be created from European

B. Demonstrate how a butterfly spread can be created from European call options. Then show how it can be created from European put options. (You do not need to draw the pay- off diagram, just indicate the positions in the respective call and put options). Use put-call parity to show that the cost of a butterfly spread created from European puts is identical to the cost of a butterfly spread created from European calls

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