Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Let us say that the apple stock is selling at $52 on Jan 31, 2021. A dividend is due in 2 months on March 31,

Let us say that the apple stock is selling at $52 on Jan 31, 2021. A dividend is due in 2 months on March 31, 2021. An exact same amount is due as dividend in 5 months on June 30, 2021.A call option with a strike price of $50 and an expiry date of July 31 is selling at a price of $4.5 on Jan 31, 2021. A put option with the same strike price and the expiry date is selling at a price of $2.45 on Jan 31, 2021.

If the risk free rate is 6% per year, what is the amount that is due as dividend (individual dividends, not total) on March 31 and June 30?

  1. $0.9
  2. $1
  3. $0.6
  4. $0.8
  5. $0.7

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

Step: 3

blur-text-image

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

ISE Financial Markets And Institutions

Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts

8th International Edition

1265561435, 9781265561437

More Books

Students also viewed these Finance questions