Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a stock price is $74, and current risk free intere

A stock price is $74, and current risk free interest rates are 2%. If the put...

80.2K

Verified Solution

Question

Finance

A stock price is $74, and current risk free interest rates are2%. If the put option with a $100 strike price expires in 6 months,and the call option is trading at $26.25, how would you arb thisoption?

Answer & Explanation Solved by verified expert
3.9 Ratings (764 Votes)
Stock current price 74 Put option Strike price 100 Expiry 6 months Riskfree rate 2 Risk free rate for 6 months 2612 1 or 001 Call option price 2625 Present value of EP EP1i    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A stock price is $74, and current risk free interest rates are2%. If the put option with a $100 strike price expires in 6 months,and the call option is trading at $26.25, how would you arb thisoption?

Other questions asked by students

Biology
1.2K views

A population consists of 100 individuals of the following genotypes: 70 AA, 20 Aa, 10 aa....

Finance
1.2K views

Halliford Corporation expects to have earnings this coming year of $3.29 per share. Halliford plans to...

Physics
1.2K views

Two 0.60 kg basketballs, each with a radius of 10 cm, are just touching. Ignore any...

Geometry
1.2K views

G H If m GHI 87 degrees what is the measure of ZJ Your Answer

Geometry
1.2K views

19 Part 3 of 3 3 points Variable costs Contribution margin Fixed costs Income Sales...

Calculus
1.2K views

Make use of Laplace transform to solve the following differential equation that satisfy the given...

Calculus
1.2K views

In the figure below which of the following is a solution to the differential equation...

Accounting
1.2K views

Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost per Month...

Accounting
1.2K views

Required: Prepare a statement of stockholders' equity for the year ended December 31, current year

Accounting
1.2K views

show work please At December 31, 2022, Novak Corporation reported the following plant assets....

Accounting
1.2K views

An asset for drilling was purchased and placed in service by a petroleum production company....

Accounting
1.2K views

1 When should taxpayers usually submit their annual declaraticn of the total salaries and wages...