Question Completion Status: QUESTION 17 5 points Suppose a certain stock is currently worth $30 and the interest rate is zero. Suppose the market prices of six-month calls are as follows Strike price 135 30 25 Call price An investor goes long with a butterfly spread constructed with 35, 30 and 25 calls. Determine the positions and fill in the following payoff table at maturity. Compute the max loss, max gain and the break-even level for this butterfly spread. Transactions S(T)35 Net QUESTION 18 5 points Suppose the price of a non-dividend-paying stock is $50. There exist European call and put options on the stock with one year to maturity and the strike price $50. The call is worth of $4.5 and the put is worth of $4. The simple risk free interest rate is 4% per annum. What is the implied interest rate for the synthetic bond based on put-call parity? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt V E x2 X2 -t O WORDS POWERED Save All Answers Save aQUESTION 15 5 points Save Answer Numerical Essay Questions. You must provide the necessary steps that lead to the answer to receive credits. Firm IBM initiates a one-year swap in which IBM swaps a sterling loan with a dollar loan, paying coupon on the sterling loan and receiving coupon on the dollar loan at maturity. The principal amounts in the two currencies are $15 million and 10 million pounds. The current exchange rate is $1.5 per pound. The one-year simple interest rates are 2% for US and 4% for UK. The initial value of the swap is zero to IBM. If the coupon rate is 10% per year for the dollar loan, what is the coupon rate on the sterling loan? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt A v X2 X2 The - t REE ... P O WORDS POWERED BY TINY QUESTION 16 5 points Save Answer Suppose a certain stock is currently worth $30 and the interest rate is zero. Suppose the market prices of six-month calls are as follows Strike price 35 30 25 Call price 6_ An investor buys a bullish spread constructed with a 35 call and a 30 call. Determine the positions in the two calls and fill in the following payoff table at maturity. Compute the max loss, max gain and the break-even level for this bull spread. Transactions S =35Remaining Time: 2 hours, 20 minutes, 26 seconds. Question Completion Status: QUESTION 19 5 points Suppose the price of a non-dividend-paying stock is $50. There exist European call and put options on the stock with one year to maturity and the strike price $50. The call is worth of $4.5 and the put is worth of $4. The simple risk free interest rate is 4% per annum. What is the cost to construct a synthetic call position based on put-call parity? For the toolbar. press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph V Arial 10pt Ev Ev EEXX + O WORDS POWERED QUESTION 20 5 points Suppose the price of a non-dividend-paying stock is $50. There exist European call and put options on the stock with one year to maturity and the strike price $50. The call is worth of $4.5 and the put is worth of $4. The simple risk free interest rate is 4% per annum Show the cash flow from an arbitrage between synthetic and actual call in the following table; Expiration date T Expiration date T Transactions Current date SM) SK S(T) > K Net Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save II app.honorlock.com is sharing your screen. Stop sharing Hide