please help questions #6-8
QUESTION 6 10 points Save Answer You buy a 1-year put option and sell the corresponding call option. Both options are written on 1 share of IBM stock and both have an exercise price of $91. In addition, you also buy 1 share of IBM stock. What is the net payoff you receive from this 3-asset portfolio if at expiration the price of each share of IBM stock is $28? QUESTION 7 8 points Save Answer Consider two "corresponding" options, consisting of a call and a put with the exact same parameter values. For this pair, the call premium is $3.2. If the current price of the underlying asset is $87 and the present value of the exercise price is $87, what is the premium of the put option, P? Write the answer with one decimal; e.g., 3.2. Do NOT use the $ symbol in your answer; just write a numerical value. QUESTION 8 10 points Save Answer Consider two "corresponding" options, consisting of a call and a put with the exact same parameter values. For this pair, the current price of the underlying asset is $97, the options have an exercise price of $82 and they expire in 4 months. Additionally, the risk-free rate is 5% p.a. What is the difference between the premium of the put option, P, and the premium of the call option, C; that is, what is the value of P-C? Write the answer with two decimals; e.g., 3.24. Do NOT use the $ symbol in your answer; just write a numerical value. Of course, include the negative sign if the answer is negative; but do not include the positive sign if the answer is positive. NOTE: Use the continuous time version of the Put-Call Parity equation (i.e., do NOT use the book's version). QUESTION 6 10 points Save Answer You buy a 1-year put option and sell the corresponding call option. Both options are written on 1 share of IBM stock and both have an exercise price of $91. In addition, you also buy 1 share of IBM stock. What is the net payoff you receive from this 3-asset portfolio if at expiration the price of each share of IBM stock is $28? QUESTION 7 8 points Save Answer Consider two "corresponding" options, consisting of a call and a put with the exact same parameter values. For this pair, the call premium is $3.2. If the current price of the underlying asset is $87 and the present value of the exercise price is $87, what is the premium of the put option, P? Write the answer with one decimal; e.g., 3.2. Do NOT use the $ symbol in your answer; just write a numerical value. QUESTION 8 10 points Save Answer Consider two "corresponding" options, consisting of a call and a put with the exact same parameter values. For this pair, the current price of the underlying asset is $97, the options have an exercise price of $82 and they expire in 4 months. Additionally, the risk-free rate is 5% p.a. What is the difference between the premium of the put option, P, and the premium of the call option, C; that is, what is the value of P-C? Write the answer with two decimals; e.g., 3.24. Do NOT use the $ symbol in your answer; just write a numerical value. Of course, include the negative sign if the answer is negative; but do not include the positive sign if the answer is positive. NOTE: Use the continuous time version of the Put-Call Parity equation (i.e., do NOT use the book's version)
