Define risk-free interest rate as an effective annual yield

Reference no: EM131974045

Question: FedEx is selling for $105 a share. A FedEx call option with one month until expiration and an exercise price of $117 sells for $2.40 while a put with the same strike and expiration sells for $14.20.

a. What is the market price of a zero-coupon bond with face value $117 and 1 month maturity? (Round your answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)

Market price $

b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Risk-free interest rate $ %

Reference no: EM131974045

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