Question
A share of Formila Corp. is currently trading at $38.50, and a 1-year call option on Formila with X = $40 is trading at $3.
A share of Formila Corp. is currently trading at $38.50, and a 1-year call option on Formila with X = $40 is trading at $3. The risk-free interest rate is 4.5%.
a . What should be the price of a 1-year put option on the stock with X = $40? Why?
b . If the price of a put is $2, construct an arbitrage strategy.
c. If the price of a put is $4, construct an arbitrage strategy.
Please solve in Excel and use =FORMULATEXT to show equations.
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Sustainable Finance And Impact Investing
Authors: Alan S. Gutterman
1st Edition
1637423764, 978-1637423769
