Imagine that a stock sells for $33. A call option with X = $35 and an expiration date in six months sells for $4.50. The annual risk-free rate is 5 percent. Calculate the price of a put option that expires in six months and has a strike price of $35.
Answer to relevant QuestionsSuppose an American call option is in the money, so S > X. Demonstrate that the market price of this call (C) cannot be less than the difference between the stock price and the exercise price. That is, explain why this ...1. You believe the price of PPRO will rise and are therefore considering either (a) taking a long position in a $45 call by paying a premium of $3, or (b) taking a short position in a $45 put for which you will receive a ...What are the responsibilities and typical payoff for a general partner in a venture capital limited partnership? An entrepreneur seeks $10 million from a VC fund. The entrepreneur and fund managers agree that the entrepreneur’s venture is currently worth $25 million and that the company is likely to be ready to go public in five ...What is the signaling theory of mergers? What is the relationship between signaling and the mode of payment used in acquisitions? Is there a relationship between the mode of payment used in acquisitions and the level of ...
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