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What is the implied risk-free rate

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The prices of European call and put options on a non-dividend-paying stock with 12 months to maturity, a strike price of $120, and an expiration date in 12 months are $20 and $5, respectively. The current stock price is $130.

Note: interest rate counpounded continuslly

a) What is the implied risk-free rate assuming the the stock pays a dividend of $2 immediately prior to the expiration date.

b) What is the implied risk-free rate assuming the the stock pays a dividend of $2 in 6-months?

Reference no: EM132796961

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