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What is the risk-free rate of return

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(a) You sold a put contract on EDF stock at an option price of $.50 and an exercise price of $21. Today, EDF stock is selling for $20 a share and your option position was closed out. Ignoring transaction costs and taxes, what is your total profit? (Assuming a contract of an option covers 100 shares of the underlying stock)

(b) CMV stock has a current market price of $47.60 a share. The one-year call on CMV stock with a strike price of $45 is priced at $3.20 while the one-year put with a strike price of $45 is priced at $.15. What is the risk-free rate of return?

Reference no: EM132788095

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