Question
The interest rate is 1.6% per annum with discrete annual compounding. You want to create a principal protected note with a maturity of one year
The interest rate is 1.6% per annum with discrete annual compounding. You want to create a principal protected note with a maturity of one year that is guaranteed to payout at least $2000, and also provide the potential for some upside if the stock market does well. You buy a certain number of call options with an exercise price of $2000 to achieve your objective. That number need not be a whole number. What is the maximum dollar value of the call options that you can buy? Your answer should be correct to two decimal places.
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Corporate Finance Core Principles and Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
3rd edition
978-0077971304, 77971302, 978-0073530680, 73530689, 978-0071221160, 71221166, 978-0077905200
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