cfa mock exam: chester midway case: q8: put-call parity with dividend

[hw0799]

in this case, when there is dividend, should we deduct the present value of dividend from S in put call parity formula? THanks.

 

[cuddle]

I have the same question. Any one can help?

 

[Harrogath]

Yes.
Remember from the L1 the clean price and dirty price of a security. Debt securities accrue interest and equity securities accrue dividends. Adjust the price for dividends on stocks because if you recall well, stock prices automatically fall by the amount of the cash dividend when it is paid.

 

[Claudz6]

yes is the answer to the above
you should deduct the PV of any dividend from the stock price