Question: part 1 indicate whether each of the following two statements...
Indicate whether each of the following two statements below is true, false or uncertain and justify your response.
(a) It is theoretically impossible for an out-of-money European call and an in-the-money European put to be trading at the same price. Both options are written on the same non-dividend paying stock.
(b) By simultaneously buying a call and short-selling the underlying asset, we can create a synthetic short position in the put.
Approx 50-100 word justification