1a) The price of a share of stock is $50. Johnny buys a nine-month put options contract on the stock. The continuously compounded risk free interest rate is 4%. After nine months, the maximum profit of the put option is calculated to be 45. If the premium of the put option is 2.50, what is the strike price of the option?

a) 47.58

b) 45.00

c) 46.37

d) 42.42

1b) The price of a share of stock is $50. Johnny buys a nine-month forward contract on the stock. The continuously compounded risk free interest rate is 4%. After nine months, the minimum profit of the forward contract is calculated to be -47.50. What is the price of the forward contract?

a) -47.50

b) 47.50

c) -48.95

d) 46.10