Answer:
Call payoff = Max [0, Stock price - Strike price]
Call payoff = Max[0,25-20]
Call payoff = 5
Put payoff = Max[0, strike price - stock price]
Put payoff = max[0,20-25]
Put payoff = 0
Strike price = K = 20
Stock price = S = 25
interest rate = 10% = 0.1
Time to expiry = T = 3 months = 3/12 = 0.25
Put call parity: C + K*Exp(-r*T) = P + S
C = P + S - K*Exp(-r*T)
Call = 3 + 25 - 20*exp(-0.1*0.25)
Call = 28 - 19.5062 =
Call = 8.4938 > 3
So, yes there is an arbitrage
. Implied value is 8.4938 but trades at 3.00; Call option is trading cheap hence we should buy more call options.
Answer:
Demographic and buyer behavior characteristics.
Explanation:
- Studying a market can be very difficult, so, sometimes researches choose random sample to study. The question arises that weather these sample represents the whole targeted market or not.
- And that should be judged carefully, if not the study will be an utter failure.
Answer: The answer is a
Explanation:
Using the formula
Expected Rate of Return = ∑(i =1 to n) Ri Pi
Where Ri = Return in scenario 1
Pi = Probability for the return in scenario 1
i = Number of scenario
n = Total number of probability and Return
P1=30
R1 = 18
P2 = 50
R2 =12
P3 = 20
R3 =-5
Expected Gain =(30 ×18) + (50 × 12) + ( 20 × -5)
= 540 + 600 + - 100
= 1,040
= 1,040 ÷ 100
= 10.4%
