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The price of the stock is $37 and interest rates are 8% per annum continuously compounded and there are 2 years to expiration.
1. The price of the stock is $37 and interest rates are 8% per annum continuously compounded and there are 2 years to expiration. If the price of the Call with strike of 40 is $9 per share quoted price and the price of the Put with strike of 40 is $7 per share quoted price then
a. Find the quoted per share price of the 40 conversion, correct ot 2 places after the decimal point.
The price is __________
b. Find the quoted per share value of the 40 conversion, correct to 2 places after the decimal point.
The value is _________
c. Find the price of synthetic stock using a strike of 40, correct to 2 places after the decimal point.
The price is ________
d. Would you buy the natural stock or the synthetic stock.
A. Natural B. Synthetic
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