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Stock C is a non-dividend paying stock with spot price $24. The stock's beta is...

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Finance

Stock C is a non-dividend paying stock with spot price $24. The stock's beta is 0.7, the risk-free rate is 4% and the market risk premium is 3%. You bought forward the stock at the forward price with maturity two years. At the same time you sold a put option on Stock C, with strike price $23 and maturity two years. What is your overall payo at maturity if in two years the price of Stock C turns out to be 18?

Answer: -12.96

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