Janet buys a one-year put and a one-year call on a share of XYZ stock according to
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Question:
Janet buys a one-year put and a one-year call on a share of XYZ stock according to the following information:
option | put | call |
strike price | $55 | $55 |
option premium | $4.13 | $6.75 |
XYZ does not pay any dividends and the annual effective interest rate is 5%. If the stock price in one year is $70, Janet's profit is $X. Determine X.(Note: Do not forget the interests on premium.)
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