Question: 1. Write down the payoff of a put option with a strike of K. What is the payoff for a position consisting of a long

1. Write down the payoff of a put option with a

1. Write down the payoff of a put option with a strike of K. What is the payoff for a position consisting of a long call and a short put both struck at K? 2. Tesla shares are trading at 850. The one year forward is trading at 1200. Where will Tesla be trading in one year's time? 3. Recall that an FX rate XXXYYY = Bid/Offer gives the rate of YYY per XXX. You can buy XXX/sell YYY at the offer price and sell XXX/buy YYY at the bid price. EURUSD is trading at 1.4760/1.4763 USDJPY is trading at 88.4/88.45 EURJPY is trading at 130.70/130.75 You have 10 million EUR. Find the sure-thing arbitrage and calculate how many EUR profit you can make, explaining the trades necessary to achieve this. 1. Write down the payoff of a put option with a strike of K. What is the payoff for a position consisting of a long call and a short put both struck at K? 2. Tesla shares are trading at 850. The one year forward is trading at 1200. Where will Tesla be trading in one year's time? 3. Recall that an FX rate XXXYYY = Bid/Offer gives the rate of YYY per XXX. You can buy XXX/sell YYY at the offer price and sell XXX/buy YYY at the bid price. EURUSD is trading at 1.4760/1.4763 USDJPY is trading at 88.4/88.45 EURJPY is trading at 130.70/130.75 You have 10 million EUR. Find the sure-thing arbitrage and calculate how many EUR profit you can make, explaining the trades necessary to achieve this

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