Question
Given: C = $4.00, P = $6.00, S = $42, K = $45, T = 3 months, r = 8%. The option contracts are written
Given: C = $4.00, P = $6.00, S = $42, K = $45, T = 3 months, r = 8%. The option contracts are written on 100 units of the underlying asset. (Show work.)
What would you do to exploit these quotes? (List all transactions you would make.) What would be your riskless profit?
How could you synthetically sell a call option? What would be the cash flow from doing this? (i.e., What is the synthetic call premium?)
Step by Step Solution
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a C 4 P 6 S 42 and K 45 t 3 months or 025 year r 8 By Put Call Parity C PVK P S In this scenario LHS RHS thereby implying the scope of generating risk...
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Fundamentals of Selling Customers for Life through Service
Authors: Charles M. Futrell
13th edition
77861019, 978-0077861018
