Hey guys, I'd appreciate some help with an assignment question. Here it is: Lalaa Corp. wants to invest its cash surplus of $1m. in a GIC (i.e., certificate of deposit) for a period of 6 months. The best GIC rate that it could find is 5.5% p.a. continuous compounding. [Note: This is the rate that Lalaa can lend its money. It is not its borrowing rate. Nor is it anybody else's lending or borrowing rate.] Mr. Dipsey, the companys treasurer, has asked you to explore the possibility of creating a synthetic lending transaction by a portfolio of options and stocks. You observed the following information: Security Price 6-month European call whose exercise price = $32 $2.10 6-month European put whose exercise price = $32 $2.92 the underlying (non-dividend-paying) stock $30 Based on the above observations, will Lalaa be better off with the GIC or the synthetic lending? If the synthetic lending is better, please also show how it can be created. So the GIC rate is 5.5%. I want to know if synthetic lending is better than the GIC. So what I did was used the put-call parity equation and solved for r (risk free rate). I got 7.5%. Am I right to say that synthetic lending is therefore better than the GIC? Or am I completely off? How would I create the synthetic lending? I'd appreciate any help. Thanks