Question
1) A stock currently sells for $72 per share. A 6-month European call option with a strike price of $70 has a premium of $4.7,
1) A stock currently sells for $72 per share. A 6-month European call option with a strike price of $70 has a premium of $4.7, and a 6-month European put option with the same strike price has a premium of $2.6. Assume that the continuously compounded interest rate is 4% per year
i)What is the implied continuously compounded dividend yield of the stock?
3)A one-year dollar dominated (European) call option at the money on the Euro with a strike price of 1.1$/Euro is traded at $0.02. The price of a (European) put option with the same strike price and maturity is $0.03. The continuous compounded US Dollar LIBOR is 4% per year. At the money means that the strike prices of the options are the same as the current exchange rate.
i)What is the Euro interest rate according to the no-arbitrage condition?
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