Question: (b) State and Put-Call Parity theorem for European options. Does the put-call parity rule apply to American option? Why is it not optimal to exercise

(b) State and Put-Call Parity theorem for European options. Does the put-call parity rule apply to American option? Why is it not optimal to exercise the American call before maturity? European put and call options with strike price $ 25 and expiry in 6-months are trading at $. 6.09 and $ 8.78, respectively. The current stock price is $ 21.37 with risk free interest rate continuous compounding equal to 8%. Is there an arbitrage opportunity? How can it be exploited? (14)

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