Question: Problem 20-16 Putcall parity The common stock of Triangular File Company is selling at $96. A 26-week call option written on Triangular Files stock is

Problem 20-16 Putcall parity

The common stock of Triangular File Company is selling at $96. A 26-week call option written on Triangular Files stock is selling for $14. The calls exercise price is $106. The risk-free interest rate is 8% per year. a. Suppose that puts on Triangular stock are not traded, but you want to buy one. Which combination will produce the same results?

multiple choice

Buy call, invest PV(EX), sell stock short
Sell call, invest PV(EX), sell stock short
Buy call, lend PV(EX), buy stock
Sell call, lend PV(EX), buy stock

b. Suppose that puts are traded. What should a 26-week put with an exercise price of $106 sell for? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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