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Question 9 Consider the toss of a (loaded) coin. In a good outcome, punter (bettor) will receive 1 in 12 months. In a bad outcome
Question 9 Consider the toss of a (loaded) coin. In a "good" outcome, punter (bettor) will receive 1 in 12 months. In a "bad" outcome she will not receive anything. The fair market price of this bet is 0.45 and current prevailing risk-free interest rate is 5%. What is the implied probability of a "good" outcome? Assume discrete compounding. 0.4235 0.4725 0.5275 0.5725 Question 10 Which of the following statements is false? Call holder has a right to buy the underlying Call seller has a right to sell the underlying Call seller has an obligation to sell the underlying if required by the holder Put seller has an obligation to buy the underlying if required by the holder
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