The current stock price is $80. The stock does not pay dividends. All contracts mature in...
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The current stock price is $80. The stock does not pay dividends. All contracts mature in one year. The annual effective rate of interest is 3.5%, F(0,7) (toward price) -82.8. • Tony short-sells two shares of the stock. • Molly takes a long position in one share of the stock. • Jim takes a short position in a forward contract to sell one share of the stock. 1. For what value of ST will Molly and Jim have the same profit? 2. For what value of ST will Tony and Molly have the same profit? The current stock price is $80. The stock does not pay dividends. All contracts mature in one year. The annual effective rate of interest is 3.5%, F(0,7) (toward price) -82.8. • Tony short-sells two shares of the stock. • Molly takes a long position in one share of the stock. • Jim takes a short position in a forward contract to sell one share of the stock. 1. For what value of ST will Molly and Jim have the same profit? 2. For what value of ST will Tony and Molly have the same profit?
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