Calculate the annual effective risk-free interest rate

Reference no: EM133251878

Question - Melinda writes a 3-month European call for a premium of $4.36. The strike price is $80. If the strike spot price at expiration is $85, then Melinda's profit is -$0.76. Calculate the annual effective risk-free interest rate.

Reference no: EM133251878

Questions Cloud

What is luther unlevered cost of capital : Suppose Luther's equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 21%. What is Luther's unlevered cost of capital

Explain the significance to the organism : Life Processes: Explain the significance to the organism(s) of each of the following processes, i.e., what function(s) does the process serve in the overall met

What is the addition to retained earnings : Vuong Rentals has sales of $546,000, costs of $295,000, depreciation expense of $37,000, What is the addition to retained earnings

Characteristic of data is important : How did mean annual temperature and mean annual spring temperature change during the combined data interval (1852-2012)? Other than the change in mean value ove

Calculate the annual effective risk-free interest rate : The strike price is $80. If the strike spot price at expiration is $85, then Melinda's profit is -$0.76. Calculate the annual effective risk-free interest rate

What price change would lead to a margin call : The initial margin is $10,000 per contract and the maintenance margin is $7,000 per contract. What price change would lead to a margin call

How much will monica have in her retirement account : The company will match the entire amount. How much will Monica have in her retirement account after forty years if she earns an annual return of 7%

Create the game matrix of this two-person game : In a small town two retailers A and B are competing for business. Create the game matrix of this two-person game

How many contracts should you buy or sell : If there are 92 days from today to the December expiration, what should be the fair futures price today? How many contracts should you buy or sell

User Account

All Pages