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You buy a share of stock, write a 1-year call option with X = $5, and buy a 1-year put option with X = $5.

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You buy a share of stock, write a 1-year call option with X = $5, and buy a 1-year put option with X = $5. Your net outlay to establish the entire portfolio is $4. The stock pays no dividends. a. What is the payoff of your portfolio? Payoff b. What must be the risk-free interest rate? (Round your answer to 2 decimal places.) Risk-free rate Risk-free rate %

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