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Consider a call option and a put option written on the stock XYZ. Both call and put have a strike of $50. Stock XYZ has the f8 You need to invest in two assets: a risk-free asset with a return of 5% and a risky asset with an expected return of 10% anConsider the following two bond investment strategies over two-year horizon IA: Buy a two-year bond IB: Buy a one-year bond a

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Answer #1

Answer 7

Bid price is the price at which Stock XYZ can be sold in market.

So selling price =$49.90

Strike of put option = $50

Put option is option to sell security at strike price. Value of put option = Strike price - Selling price

50-49.90 = 0.10

value is positive. So it is in the money

Ask price is price at which XYZ can be bought.

So buying price = $50.20

Strike of call option = $50

Call option is option to buy stock at strike price that is $50

Value of call option = Stock price - strike price

50.20-50

=0.20

Value is positive. So call option is in the money.

Answer is a. in, in

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