derivatives 8 1.

1. You are given the following: The current price to buy one share of XYZ stock is $600. The stock does not pay dividends. The continuously compounded risk-free rate is 5% per annum. A European call option on one share of XYZ stock with a strike price of K that expires in one year costs $55. A European put option on one share of XYZ stock with a strike price of K that expires in one year costs $26. Using put-call parity, calculate the strike price, K