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You are given the following: (i) The 1-year forward price to buy one share of XYZ stock is 400. (ii) The stock pays continuous dividends
You are given the following:
(i) The 1-year forward price to buy one share of XYZ stock is 400.
(ii) The stock pays continuous dividends at a rate of 3%.
(iii) The annual risk-free interest rate, compounded continuously, is 5%.
(iv) A European call option on one share of XYZ stock with a strike price of K that expires in 1 year costs 66.59.
(v) A European put option on one share of XYZ stock with a strike price of K that expires in 1 year costs 18.64.
Using put-call parity, calculate the strike price, K.
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