Risk-free interest rate from now until options maturity date

Assignment Help Financial Management

Reference no: EM13937115

You buy a share of stock, write a one-year call option with a strike price X = $28, and buy a one-year put option with a strike price X = $28. Your net initial cost to establish the entire portfolio is $26.70. What must be the risk-free interest rate from now until the options maturity date? The stock pays no dividends. (Do not round intermediate calculations. Enter your answer as a percentage rounded to two decimal places.)

Risk-free rate %

Reference no: EM13937115

Questions Cloud

What is the companys pretax cost of debt : Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. Wha..

Information effect-expectations theory-clientele effect : JBC Corp. declared a dividend of $2 per share, which was an increase of 25% from the prior year, yet JBC Corp. stock declined by 3% the day of the announcement. RBG Corp. declared a dividend of $2 per share, which was the same as the prior year, and ..

Risk and return-coefficient of variation : Risk and Return, Coefficient of Variation. Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship: Std Dev. Exp. Return Company A 10.4 13.2 Company B 7.6 8.7

Construct a pro forma income statement : Construct a pro forma income statement for the first year and second year for the following assumptions: Units of Sales in Year 1: 110,000 Price per Unit: $11 Variable cost per unit: 25% Fixed Costs: $129,000 Income taxes: 20% Interest Expense: $170,..

Risk-free interest rate from now until options maturity date : You buy a share of stock, write a one-year call option with a strike price X = $28, and buy a one-year put option with a strike price X = $28. Your net initial cost to establish the entire portfolio is $26.70. What must be the risk-free interest rate..

A stock has an expected return-market risk premium : A stock has an expected return of 16.1 percent, the risk-free rate is 6.45 percent, and the market risk premium is 7.2 percent. What must the beta of this stock be?

Use the geometric average growth rate : Suppose Stark Ltd. just issued a dividend of $2.14 per share on its common stock. The company paid dividends of $1.80, $1.89, $1.96, and $2.07 per share in the last four years? If the stock currently sells for $60, what is your best estimate of the c..

Domestic wastewater treatment : Domestic Wastewater treatment using vermin-bio filtration

Silver ion concentration : Silver ion concentration changes over the filter bed depths

User Account

All Pages