# Error on book w/ image

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…

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.

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

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)?

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.

lol… I like the attitude. thank ya

You are welcome.