Question

Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $105 sellPlease do 5B

0 0
Add a comment Improve this question Transcribed image text
Answer #1

1.

Using put call parity

Price of bond=S+P-C=100+6.94-2=104.94

2.

Effective annual interest rate is given as equal to=(105/104.94)^12-1=0.7%

Add a comment
Know the answer?
Add Answer to:
Please do 5B Netflix is selling for $100 a share. A Netflix call option with one...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Netflix is selling for $105 a share. A Netflix call option with one month until expiration...

    Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...

  • Netflix is selling for $105 a share. A Netflix call option with one month until expiration...

    Netflix is selling for $105 a share. A Netflix call option with one month until expiration and an exercise price of $121 sells for $2.30 while a put with the same strike and expiration sells for $17.40. a. What is the market price of a zero-coupon bond with face value $121 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...

  • Netflix is selling for $100 a share. A Netflix call option with one month until expiration...

    Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $109 sells for $2.40 while a put with the same strike and expiration sells for $11.25. a. What is the market price of a zero-coupon bond with face value $109 and 1-month maturity? (Round your answer to 2 decimal places.) Market price b. What is the risk-free interest rate expressed as an effective annual yield? (Round your answer to...

  • Netflix is selling for $100 a share. A Netflix call option with one month until expiration...

    Netflix is selling for $100 a share. A Netflix call option with one month until expiration and an exercise price of $111 sells for $2.40 while a put with the same strike and expiration sells for $12.18. a. What is the market price of a zero-coupon bond with face value $111 and 1-month maturity? a. What is the market price of a zero-coupon bond with face value $111 and 1-month maturity b. What is the risk-free interest rate expressed as...

  • Suppose that a call option with a strike price of $48 expires in one year and...

    Suppose that a call option with a strike price of $48 expires in one year and has a current market price of ​$5.15. The market price of the underlying stock is ​$46.24​, and the​ risk-free rate is 1​%. Use​ put-call parity to calculate the price of a put option on the same underlying stock with a strike of ​$48 and an expiration of one year. 1. The price of a put option on the same underlying stock with a strike...

  • 4. A call option currently sells for $7.75. It has a strike price of $85 and...

    4. A call option currently sells for $7.75. It has a strike price of $85 and seven months to maturity. A put with the same strike and expiration date sells for $6.00. If the risk-free interest rate is 3.2 percent, what is the current stock price? 5. Suppose you buy one SPX call option contract with a strike of 1300. At maturity, the S&P 500 Index is at 1321. What is your net gain or loss if the premium you...

  • 2. The market price of a 100-share European call option contract is $560. The expiration date...

    2. The market price of a 100-share European call option contract is $560. The expiration date of the call option is one year from today. On that date, the price of the underlying stock will be either $50 or $32. The two states are equally likely to occur. Currently, the stock sells for $40; its strike price is $41, Suppose you are able to borrow money at 10 percent per annum. Is there an arbitrage chance? How can you make...

  • 2. The market price of a 100-share European call option contract is $560. The expiration date...

    2. The market price of a 100-share European call option contract is $560. The expiration date of the call option is one year from today. On that date, the price of the underlying stock will be either $50 or $32. The two states are equally likely to occur. Currently, the stock sells for $40; its strike price is $41, Suppose you are able to borrow money at 10 percent per annum. Is there an arbitrage chance? How can you make...

  • (i) The current stock price is 100. The call option premium with a strike price 100...

    (i) The current stock price is 100. The call option premium with a strike price 100 is 8. The effective risk-free interest rate is 2%. The stock pays no dividend. What is the price of a put option with strike price 100? (Both options mature in 3 months.) (ii) The 3-month forward price is 50. The put option premium with a strike price 52 is 3 and the put option matures in 3 months. The risk-free interest rate is 4%...

  • Problem 22-6 Put-Call Parity A stock is currently selling for $73 per share. A call option...

    Problem 22-6 Put-Call Parity A stock is currently selling for $73 per share. A call option with an exercise price of $77 sells for $3.65 and expires in three months. If the risk-free rate of interest is 3.3 percent per year, compounded continuously, what is the price of a put option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Put price

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT