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Suppose you are looking to exploit opportunities in the options markets. The price of a put option on Apple computers with a maturity of one
Suppose you are looking to exploit opportunities in the options markets. The price of a put option on Apple computers with a maturity of one year and strike price $150 is $15, and the price of the stock is $140. What should the price of a call option be to preclude profitable opportunities? The risk-free rate of interest is 5%. $32.69$17.68$12.32$2.69 QUESTION 16 6 points (Extra Credit) Bonus question: Amazon is currently trading for $27 per share. The stock pays no dividends. The price of a put option on Amazon with a maturity of one year and strike price is $2.6, your risk-free arbitrage trading strategy? Write down the detailed process. The risk-free rate of interest is 6%. (Hint: Based on put-call parity, which side is overpricing?)
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