Unformatted text preview: Determine the possible exercise prices for the call and the put. A. $52.50 or $77.50 B. $50.30 or $72.30 C. $57.40 or $67.40 D. $47.50 or $82.50 6. Assume that a stock is currently selling for $50. The stock price could go up by 10% or fall by 2% each month. The monthly interest rate is 1% (periodic rate). Calculate the price of a call option on the stock with an exercise price of $40 and a maturity of two months. (use the binomial method) A. $12.66 B. $10.79 C. $11.47 D. $ 9.99 E. $13.84 7. Assume that a stock is currently selling at a price of $75.00 in the open market. A put, with an exercise price of $77.00, sells for $2.00. Determine what riskfree rate would be implied by putcall parity if the equivalent call for the same stock sells for $1.75. A. 4.26% B. 6.66% C. 5.48% D. 3.07% E. 2.33%...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff
 Interest, Interest Rate, Options

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