how do dividends and interest rates affect put call parity 
dividends and interest rates can significantly affect the relationship for assets that pay dividends the expected dividend payments must be factored into the parity equation because they affect the underlying asset s price generally dividends reduce the value of call options and increase the value of put options interest rates also play a role higher interest rates usually increase call option prices and decrease put option prices as the cost of carrying the underlying asset influences option premiums 2