What is the implied risk-free interest rate

Assignment Help Finance Basics

Reference no: EM132050023

Question: The price of a european call and put on a stock are $2 and $5, respectively. both have a strike price of $45 and an expiration date of 6 months. the current price of the underlying non-dividend paying stock is $40? what is the implied risk-free interest rate? the answer is 9.09%. I want to know the process.

Reference no: EM132050023

Questions Cloud

Find organizational requirements that are key for enhancing : You are an analytics consultant. You have been asked to convince a skeptical CEO that analytics will be beneficial to the organization.

Minimize adverse environmental effects : How would this fuel be produced to minimize adverse environmental effects?

Draw a column chart for both bond prices : Draw a column chart for both bond prices, and then, change the discount rate from 1% to 20% and see what happens to the charts.

Calculate meyers basic and diluted eps to cents : In addition, the company has only potentially dilutive security; $100,000 of 6% convertible bonds, convertible into total of 4,000 common shares.

What is the implied risk-free interest rate : The price of a european call and put on a stock are $2 and $5, respectively. both have a strike price of $45 and an expiration date of 6 months.

What portion of its net income is the firm expected : If the firm's net income is expected to be $1.7 billion, what portion of its net income is the firm expected to pay out as dividends?

How much has the company gained or lost : Now suppose that on November 16, heating oil has dropped to $1.80 per gallon and the risk-free rate has risen to 6% for all times.

Find the companys expected growth rate at the end : If the firm's net income is expected to be $1.8 billion, what portion of its net income is the firm expected to pay out as dividends?

What is the price of a two-year european put option : The price of a European call option on a stock with a strike price of $60 is $7. The stock price is $62 and time to maturity is 2 years.

Reviews

Write a Review

Required(*) Message

Finance Basics Questions & Answers

Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

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!

Submit Assignment

User Account

All Pages