Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / It is possible to buy three-month call options and three-month puts on stock Q
It is possible to buy three-month call options and three-month puts on stock Q. Both options have an exercise price of $70 and both are worth $20.
If the interest rate is 5.25% a year, what is the stock price? (Hint: Use put–call parity.) (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Stock price $
| As per put call parity |
| Call price + PV of exercise price = Spot price + Put price |
| 20+70*e^(-0.0525*0.25)=Spot price+20 |
| Spot price = 69.09 |
