If the stock makes a dividend payment before the expiration date, then the put-call parity relation is

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Quizplus · Accepted Answer

The correct put-call parity relation, accounting for dividends, is: Value of call = value of put + share price - present value (PV) of dividend - PV of exercise price. This accounts for the fact that owning a call option does not entitle the holder to dividends paid during the option's life, hence the need to subtract the PV of dividends from the equation.

If the Stock Makes a Dividend Payment Before the Expiration