Error on book w/ image

[CFready]

Hello guys I think there is an error on my schweser book. page 186 of book 5. Do you have the same error?
I bought this set on ebay..

 

[Harrogath]

Unfortunately the professor’s note does not specify the case when the risk-free rate decreases, only when it increases. But if it didn’t specify that case, then it should be intuitive: for call options the relation between RFR and call value is positive, but for put options the relation is negative.

 

[Gigaloo]

You can always recall put call parity equation when in doubt.

 

[CFready]

wait, I was asking if that is an error on the book..

 

[studyguy18]

CFready wrote:
wait, I was asking if that is an error on the book..

If
C + [X / (1 + Rf)^T] = S + P
Then what is the relationship between Rf and the value of the put and call options (holding other inputs constant)?

 

[Gigaloo]

C - S + [X / (1 + Rf)^T] = P. Keeping other things equal, you can clearly see put option and risk free rate are inversely related.
P + S - [X / (1 + Rf)^T] = C. Keeping other things constant, they are directly related.

 

[CFready]

lol.. I like the attitude. thank ya

 

[Gigaloo]

You are welcome.