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Shares of XYZ, a non-dividend paying stock, will sell for either $108 or $80 in...

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Finance

Shares of XYZ, a non-dividend paying stock, will sell for either $108 or $80 in one month, with (real) probabilities 0.60 and 0.40 respectively. A European call on XYZ with an exercise price of $100 sells for $4.36 today. The equivalent put sells for $7.27. Both options mature in one month.

a) What is the implied one-month risk-free interest rate in this economy?

(b) What is the implied price of the stock today?

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