Suppose the risk-free interest rate

Reference no: EM131090686

Take as given the conditions described in the previous question, and suppose the risk-free interest rate is 6 percent per year. You are contemplating investing $107.55 in a one-year CD and simultaneously buying a call option on the stock market index fund with an exercise price of $110 and a ma- turity of one year. What is the probability distribution of your dollar return at the end of the year?

Reference no: EM131090686

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