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Gestion 12 Suppose that the 3.year interest rate is 6% with continuous compounding. This means that $835 will grow to $1000 in 3 years. Suppose

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Gestion 12 Suppose that the 3.year interest rate is 6% with continuous compounding. This means that $835 will grow to $1000 in 3 years. Suppose that a IBM stock is currently worth $1000. A 3.year at-the-money European call option on the IBM Mock can be currently purchased at $165. Assume that you buy a 3 year zero-coupon bond which is selling at $835 with a principal of S1000 and a year at the Europea call option on the IBM stock. What will be total value of your investment (portfolio) i IBM stock price goes up by 10% over the next three years? TT TT Paragraph. Arial + 3(121) .E. T.. XDOQEEITT, 24 -->

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