Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Put Call Parity
(a) The continuously-compounded risk free rate per annum is 20% per year. European call options on the stock of XYZ CORP with an exercise price of $35 and a maturity date 6 months hence are selling for $4. XYZ CORP will pay no dividends during the next half year. European put options with the same maturity date and exercise price are selling for $0.67.
Short-sales of stock are strictly illegal. Use a payoff table to show how you can replicate the payoff in 6 months time from short-selling 5 shares today.
(b) Suppose the stock of XYZ CORP is presently selling for $32. Use a payoff table to show how you can make an arbitrage profit. You can buy XYZ's stock.
(c) Now suppose you cannot trade in the stock of XYZ CORP at all, but you can still trade in options. Suppose European put and call options on XYZ CORP stock with a maturity date 6 months hence and an exercise price of $45 are selling for $7 and $1.50 respectively. Also assume that you can trade in the options in part (a).
Use the put call parity relationship and a payoff table to illustrate an arbitrage strategy which will put money in your pocket today and will have zero payoffs in all future states of the world.
Describe the typical processes involved in project authorisation for a project of moderate complexity, including the role and position of the authorising person
the fruit co. has total assets of 7800 fixed assets of 7100 current liabilities of 1500 and long-term liabilities of
What are the pros and cons of participating mortgages from both the borrower's and lender's perspectives, as compared to otherwise similar straight mortgage.
Examine the sample grant application in Director's Resource 6-1. What is the important of the Statement of Agency Commitment
Describe the structure of banks in terms of bank charters, branch banking, and bank holding companies.
your employer has offered to contribute 50 a week to your retirement savings account. assume you work for this
A five year treasury bond has a 5% yield. a 10-year treasury bond has a 6% yield. a 10-year corporate bond has an 8% yield. the market expects that inflation will average 2.5 percent over the next 10 years.
Write a memorandum outlining the issues that you regard as critical to the decision to invest, other than purely commercial ones about product costs, markets and prices, and competition.
What is a business risk and what are some of the factors that influence a firm's business risks as it relates to their business operations or marketplace. Explain the difference between financial and business risks within a business structure?
compute the level factor and the butterfly spread for each term structure in table given below a which period had the
What annual interest rate must be obtained to accumulate $39,108 in 16 years on an investment of $13,576 with quarterly compounding?
Calculation of effective interest rate of foreign currency loan due to changes in exchange rates
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd