MA373 S11 Quiz 7-1

MA373 S11 Quiz 7-1 - 3 The stock of Johnson Corporation...

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Math 373 Quiz 7 April 21, 2011 1. The stock of Hunter Corporation currently sells for 150. Edyta enters into a one year floor on Hunter stock. You are given: a. The annual effective risk free interest is 6%. b. The premium for a one year Put on Hunter with a strike price of 150 is 4.32. Calculate the profit if the spot price of Hunter in one year is 100.
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2. The stock of Hunter Corporation currently sells for 150. Edyta buys a one year Call with a strike price of 150 on Hunter stock. You are given: a. The annual effective risk free interest is 6%. b. The premium for a one year Put on Hunter with a strike price of 150 is 4.32. Calculate the premium for the one year call.
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Unformatted text preview: 3. The stock of Johnson Corporation currently sells for 80. Mike buys a one year synthetic forward with a one year call and a one year put, both with a strike price of 80 on Johnson stock. The annual effective risk free interest is 4%. Calculate the profit if the spot price of Johnson is 90 in one year. 4. Which of the following are true? Circle each true statement. a. A straddle is a bet on volatility. b. A strangle is a bet on volatility. c. In a collar, you buy a put and sell a call with same strike price. d. In a straddle, you buy a put and a call with same strike price....
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MA373 S11 Quiz 7-1 - 3 The stock of Johnson Corporation...

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