Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with number 2 of this question. I plug 0.49 as a result, but it is incorrect. It can be said that the

image text in transcribed

I need help with number 2 of this question. I plug 0.49 as a result, but it is incorrect. It can be said that the call and put options must have the same price? So, the answer have to be 0.51 as well?

image text in transcribed
The stock price of syscom is $1to now The one year European call on SysCom with a strike price of $1 10 trades for $15 . Also , the one year European put with a strike price of $1 10 is worth $5 . Find the one year interest rate . ( Note : You ur answer should be a number in percentage form . Do not enter 96 ! ) 10 2 . A one year binary cash-or - nothing call option with strike at $120 pays $1 at expiration if the stock price of Sys com is equal to or above $120 one year later ( note : this is not the standard call option ! ) . On the other hand , a one - year binary cash- or - nothing put option with strike at $120 pays $1 at at expiration if the stock price is below $ 120 one year later Suppose we know that the price of this binary call option is $0 51 What is the price of the binary put -option ? $ 121

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes

11th edition

9781259278617, 77861647, 1259278611, 978-0077861643

More Books

Students also viewed these Finance questions

Question

How do we pass an array to a function?

Answered: 1 week ago

Question

What is dynamic array sizing, and how is it accomplished?

Answered: 1 week ago

Question

What is inheritance?

Answered: 1 week ago