face value of $1000 are currently selling for 956 30/32. implied riskless annual rate of interest= 4.5% Suppose you can purchase a share of KFC stock for $27. At the same time a put option on KFC maturing in one year with a strike price of $30 is selling for $4. a) If you buy 1000 shares and 1000 put options, how much would it cost, and what value would your portfolio have in one year as a function of the price of KFC stock at that time pT [draw a graph of the latter]? b) What should be the price of 1000 call options on KFC stock maturing in one year with a strike price of $30?
One-year zero coupon Treasury strips with a face value of $1000 are currently selling for 956 30/32.
implied riskless annual rate of interest= 4.5%
Suppose you can purchase a share of KFC stock for $27. At the same time a put option on
KFC maturing in one year with a strike price of $30 is selling for $4.
a) If you buy 1000 shares and 1000 put options, how much would it cost, and what value would your portfolio have in one year as a
b) What should be the price of 1000 call options on KFC stock maturing in one year with a strike price of $30?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
If you buy 1000 shares and 1000 put options, how much would it cost, and what value would your portfolio have in one year as a function of the price of KFC stock at that time pT [draw a graph of the latter]?
by Bartleby Expert
