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Actuarial FM question: Please show steps, final answer is 1275.42 A stock currently has a price of 1300. The price of a three month 1320-strike
Actuarial FM question:
Please show steps, final answer is 1275.42
A stock currently has a price of 1300. The price of a three month 1320-strike put is 81.41. The annual interest rate is 4% compounded continuously. Bob buys this put, and Rick enters into a long forward contract. In three months, Bob and Rick have the same profit. What is the price of the stock in three months?
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