Arbitrage profit opportunity

Assignment Help Finance Basics
Reference no: EM133061845

Suppose that the put premium with a strike price of $100 and the time to maturity of 3 months is $30. The current stock price is $120 and the risk-free interest rate is 8%. Is there an arbitrage profit opportunity if the call on the same stock is selling for $45? If there is an arbitrage profit opportunity, what would you do to exploit the opportunity? Also, prove how the opportunity can be realized

Reference no: EM133061845

Questions Cloud

Samuel break-even spot rate : Samuel decides to sell put options on Singapore dollars. What will be Samuel's break-even spot rate (in direct format)? Keep all decimal numbers.
By how much did Sweeney - Allen net income increase : By how much did Sweeney & Allen's net income increase or decrease as a result of the adjusting entries performed in part a? (Ignore income taxes.)
How to maximize the data accuracy : How to maximize the data accuracy so that the decision -making for an organisation can be optimized.
What are the annual cca tax shields : Spherical Manufacturing recently spent $18 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 45% and?
Arbitrage profit opportunity : Suppose that the put premium with a strike price of $100 and the time to maturity of 3 months is $30. The current stock price is $120 and the risk-free interest
Prepare an income for the year using functional method : Purchase returns and allowances 150,000 Rental income 250,000. Prepare an income for the year using functional method
Write a short script to establish your credentials : Write a short script to establish your credentials. The credentials can be made-up and do not have to reflect your own education/work experience
Investigate the application of augmented reality : Write an outline for this report by listing out all the sections and subsection you will include in this report - leveraging cutting-edge technologies
What audit adjusting entry is needed : Inventory was received on 1/3/21 for the calendar year-end 12/31/21 for $1M. The terms were FOB shipping. What audit adjusting entry is needed

Reviews

Write a Review

Finance Basics Questions & Answers

  How much of the coming years earnings

How much of the coming years earnings should be paid out in dividends if the company has $400,000 in projects whose expected returns exceed 12 percent?

  Think of a leader who espoused one message

Think of a leader who espoused one message and then acted in a different manner. How did it affect the leader's ability to be an effective leader?

  Return to the assumption that the company has 5 million in

return to the assumption that the company has 5 million in assets at the end of 2013 but now assume that the company

  Retain a more diverse workforce

Discuss five main things you would do to recruit and retain a more diverse workforce?

  What is the net present value of this project

What is the net present value of this project given your sales forecasts?

  What is the annual amount

What is the annual amount that Paul can spend while on his world our if he will have no money left in the bank when he dies? Assume Paul has a remaining 25 years and earns 9 percent on his savings.

  The value of studying ethics in leadership

Choose one of the following statements and argue your position (are you in favor or opposed to the statement). You should use at least three credible sources.

  Create benchmarking matrixes

Evaluate a company's past financial performance as indicators in areas of profitability, liquidity, leverage, and efficiency; to create benchmarking matrixes

  What is the earning per share for puma corporation

Puma Corporation has the following information for the year to 30 June 2019 Profit for the year RM3.2 million Ordinary dividend paid RMO.84 million Number of or

  How much life insurance shaan and anita should carry

Anita is a "nonworking" spouse who devotes all of her time to household activities. Estimate how much life insurance Shaan and Anita should carry.

  Npvs and irrs for mutually exclusive projects

Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory.

  Find the expected npv

The required rate of return is 12% and the cash flows from a potential project under three scenarios are below.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd