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: Zin 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

Q

114U INI14UH What will be the ESR frequency of an unpaired electron in a magnetic...

Physics
Q

1. A. Compare the action potentials observed in cardiac muscle and skeletal muscle. B. Then describe the...

Medical Sciences
Q

two masses m1 and m2 move under their mutual gravitation attraction in a uniform external gravitational...

Physics
Q

What are the manager’s roles in a development system? Which role do you think is most...

General Management
Q

11 Find the period and frequency of a pendulum on Earth if it has a...

Physics
Q

2 The angle x lies in the interval and sin x value of sin2x Round...

Algebra
Q

b Regular octagon XC

Algebra
Q

25. Discontinue a Segment Product Tango has revenue of $194,800, variable cost of...

Accounting
Q

Q1.ABC Corporation manufactures two products, Product S and Product W. Product W is of fairly...

Accounting
Q

Question 2 (5 points) Harris Pilton Inc. has 5,000 shares outstanding on January 1. The...

Accounting
Q

ACCOUNT NO. ACCOUNT 101 Cash 111 Accounts receivable 121 Supplies 131 Prepaid insurance 141 Equipment...

Accounting
Q

Fill in the missing data for items a and b based on the following information:...

Accounting