1.
Using put call parity
Price of bond=S+P-C=100+6.94-2=104.94
2.
Effective annual interest rate is given as equal to=(105/104.94)^12-1=0.7%
Please do 5B Netflix is selling for $100 a share. A Netflix call option with one...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $109 sells for $2.40 while a put with the same strike and expiration sells for $11.25. a. What is the market price of a zero-coupon bond with face value $109 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...
Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $116 sells for $2.30 while a put with the same strike and expiration sells for $13.10. a. What is the market price of a zero-coupon bond with face value $116 and 1-month maturity? (Round your answer to 2 decimal places.) b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to 2 decimal...
Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $111 sells for $2.40 while a put with the same strike and expiration sells for $12.18. a. What is the market price of a zero-coupon bond with face value $111 and 1-month maturity? a. What is the market price of a zero-coupon bond with face value $111 and 1-month maturity b. What is the risk-free interest rate expressed as...
Suppose that a call option with a strike price of $48 expires in one year and has a current market price of $5.15. The market price of the underlying stock is $46.24, and the risk-free rate is 1%. Use put-call parity to calculate the price of a put option on the same underlying stock with a strike of $48 and an expiration of one year. 1. The price of a put option on the same underlying stock with a strike...
ABS stock is selling for $30 a share. Price of a 6-month call option with a strike price of $32 is $0.50. Risk-free rate is 0.5% per month. What is the price of a 6-month put option with a strike price of $32?
4. A call option currently sells for $7.75. It has a strike price of $85 and seven months to maturity. A put with the same strike and expiration date sells for $6.00. If the risk-free interest rate is 3.2 percent, what is the current stock price? 5. Suppose you buy one SPX call option contract with a strike of 1300. At maturity, the S&P 500 Index is at 1321. What is your net gain or loss if the premium you...
2. The market price of a 100-share European call option contract is $560. The expiration date of the call option is one year from today. On that date, the price of the underlying stock will be either $50 or $32. The two states are equally likely to occur. Currently, the stock sells for $40; its strike price is $41, Suppose you are able to borrow money at 10 percent per annum. Is there an arbitrage chance? How can you make...
2. The market price of a 100-share European call option contract is $560. The expiration date of the call option is one year from today. On that date, the price of the underlying stock will be either $50 or $32. The two states are equally likely to occur. Currently, the stock sells for $40; its strike price is $41, Suppose you are able to borrow money at 10 percent per annum. Is there an arbitrage chance? How can you make...