rlsrachaellouisesmith
Ton up Member
Hi,
In (ii) of the question we are asked to prove put call parity using a self financing replication portfolio.
We have also got a proof in Chapter 12 where we say:
assuming no arbitrage, and by the law of one price
whereas for this proof the one from chapter 16/17 we say:
given the portfolios are self financing and arbitrage is not allowed
Are there any further difference between the 2 proofs other than this? If so, I have missed the detail.
What is the difference between these two statements?
Thank you,
Rachael
In (ii) of the question we are asked to prove put call parity using a self financing replication portfolio.
We have also got a proof in Chapter 12 where we say:
assuming no arbitrage, and by the law of one price
whereas for this proof the one from chapter 16/17 we say:
given the portfolios are self financing and arbitrage is not allowed
Are there any further difference between the 2 proofs other than this? If so, I have missed the detail.
What is the difference between these two statements?
Thank you,
Rachael