What term refers to the methods involved in processing information, applying knowledge, forming perceptions, and making decision
2 answers:
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Answer:
$0.745
Explanation:
GIven that
Current stock price = $40
strike price X = $50
time to expiry of option = 3 - month
put price option = $11
call price option = $1
and the risk-free rate r = 6%
The amount that can be made on the arbitrage can be evaluated as a function of the Put-call parity.
i.e For parity ;
50.255 = 51
the difference in both values above illustrates that there is no parity taking place and the arbitrage estimation here = 51 - 50.255 = $0.745