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amm1812
3 years ago
14

Problem 3.1. A European call option on a stock with a strike price of $50 and expiring in six months is trading at $14. A Europe

an put option on the stock with the same strike price and expiration as the call option is trading at $2. The current stock price is $60 and a $1 dividend is expected in three months. Zero coupon risk-free bonds with face value of $100 and maturing after 3 months and 6 months are trading at $99 and $98, respectively. Identify the arbitrage opportunity open to a trader.
Business
1 answer:
pantera1 [17]3 years ago
7 0

Answer:

The. Trader should buy the out option

Explanation:

See attached file

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

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Division A:

Gross profit margin= 199,000/2,340,000= 0.085= 8.5%

Division B:

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Answer:

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