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The current spot price of the stock of the Southwest Airlines (LUV) is 40.00. The current annual effective risk-free interest rate is 10.25%. The Forward
The current spot price of the stock of the Southwest Airlines (LUV) is 40.00. The current annual effective risk-free interest rate is 10.25%. The Forward Price for a 6-month forward contract on LIV stock is 42.00. A 6-month European style call option on LIV stock with a strike price of 40 has a premium of 1.50. A 6-month European style put option on LIV stock with a strike price of 40 has a premium of 3.50. 9. Calculate the maximum profit that you could have on the short forward. 10. Calculate the minimum profit (maximum loss) that you could have on the long call. 11. Determine the spot price of LUV stock in 6 months such that the profit will be zero on a put option. The current spot price of the stock of the Southwest Airlines (LUV) is 40.00. The current annual effective risk-free interest rate is 10.25%. The Forward Price for a 6-month forward contract on LIV stock is 42.00. A 6-month European style call option on LIV stock with a strike price of 40 has a premium of 1.50. A 6-month European style put option on LIV stock with a strike price of 40 has a premium of 3.50. 9. Calculate the maximum profit that you could have on the short forward. 10. Calculate the minimum profit (maximum loss) that you could have on the long call. 11. Determine the spot price of LUV stock in 6 months such that the profit will be zero on a put option
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