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6.1 (14 points) The common stock of Ben's Burger (BB) has been trading in a narrow price range for the past months and Ben is
6.1 (14 points) The common stock of Ben's Burger (BB) has been trading in a narrow price range for the past months and Ben is convinced that it is going to break far out of that range within the next 6 months. Unfortunately, he does not know whether it will go up or down. The stock is currently trading at 26 $ per share and the price of a 6-month call option at an exercise price of 26 $ is 3 $. (a) Assume that the risk-free interest rate is 2% per year. Using Put-Call-Parity, what must be the price of a 6-months put option with strike 26 $ on BB stock? (2 points) (b) What are two differences between Forwards and Futures. (1 Points) (c) Why do investors have to pay for options a premium, but not for Forwards/Futures? (2 Points)
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