Put-Call Parity and the Development of the Modern Mortgage

Posted: 9 Apr 1997

See all articles by Michael S. Knoll

Michael S. Knoll

University of Pennsylvania Law School; University of Pennsylvania Wharton School -- Real Estate Department

Date Written: February 1997

Abstract

The recent explosion of financial innovation, by placing pressure on the existing but inconsistent legal categories, raises difficult legal issues. This phenomenon, which is well recognized in both legal and financial literatures, is not as new as is widely believed. Recent developments represent a difference in degree, not kind, with earlier developments. Using the put-call parity theorem, I describe how the ability to convert financial positions between stock, debt and options has been used since ancient times to circumvent legal rules on usury. In addition, I use the put- call parity theorem to trace the development of the modern mortgage back to Medieval England.

JEL Classification: G18, K22, N24

Suggested Citation

Knoll, Michael S., Put-Call Parity and the Development of the Modern Mortgage (February 1997). Available at SSRN: https://ssrn.com/abstract=10385

Michael S. Knoll (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6190 (Phone)
215-573-2025 (Fax)

University of Pennsylvania Wharton School -- Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

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