put-call parity

1. Explain how to synthetically create the equity-linked CD in Section 15.3 by using a forward contract on the S&P index and a put option instead of a call option. (Hint: Use put-call parity. Remember that the S&P index pays dividends.)
2. Consider the equity-linked CD in Section 15.3. Assuming that profit for the issuing bank is zero, draw a graph showing how the participation rate, ? , varies with the coupon, c. Repeat assuming the issuing bank earns profit of 5%.