All conditions for put-call parity are satisfied

Assignment Help Financial Management

Reference no: EM131603371

You are given that all conditions for put-call parity are satisfied. The following are current option prices on a certain computer company, as of June 9, 2013:

• For the exercise price of $400, date of expiration June 28, 2012, the call premium is $40.05, and the put premium is $1.43.

• For the exercise price of $410, date of expiration June 28, 2012, the call premium is $31.05, and the put premium is $2.40. Find the continuously compounded annual risk-free interest rate. Assume 365 days in a year.

Reference no: EM131603371

Questions Cloud

Global competition and ethical business practices : What would you say is the biggest issue facing the business world today? Global Competition, Ethical business practices, environmental issues,

Discuss the four key success factors of dashboard reporting : Your sample balanced scorecard and dashboard reporting Discuss the four key success factors of dashboard reporting.

Assume that investor has no transaction costs : Assume that investor has no transaction costs, and only pays a premium for any option purchased, and receives premium for any option written.

Company issues six year corporate bond with face value : A company issues a 6 year corporate bond with a face value of $1000 and a credit rating of B. What is the coupon rate?

All conditions for put-call parity are satisfied : You are given that all conditions for put-call parity are satisfied. For the exercise price of $400, date of expiration June 28, 2012,

What is the present value of the annuity : If the discount rate is 10.7 percent compounded bimonthly, what is the present value of the annuity?

Decide if debt-preferred stock or common stock should be use : Given the following, decide if debt, preferred stock, or common stock should be used.

Calculate return on equity under each of three economic : Calculate the return on equity (ROE) under each of the three economic scenarios assuming the firm goes through with the recapitalization.

How much should you be willing to pay for bond today : Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a $1,000 par value. How much should you be willing to pay for Bond X today?

User Account

All Pages