iv) The spot EURMAD is 11.48 (One Euro is for 11.48 MADs). The price of a put to sell one Euro at 10.18 MADs in 11 months is 1.22 MADs. The risk-free rate on the MAD is 6.65% and the risk-free rate on the Euro is 5.36%. What should the price of a call on the EURMAD, that has the same strike price and expiration as the put, be?
iv) The spot EURMAD is 11.48 (One Euro is for 11.48 MADs). The price of a put to sell one Euro at 10.18 MADs in 11 months is 1.22 MADs. The risk-free rate on the MAD is 6.65% and the risk-free rate on the Euro is 5.36%. What should the price of a call on the EURMAD, that has the same strike price and expiration as the put, be?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:iv) The spot EURMAD is 11.48 (One Euro is for 11.48 MADs). The price of a put to sell
one Euro at 10.18 MADs in 11 months is 1.22 MADs. The risk-free rate on the MAD is
6.65% and the risk-free rate on the Euro is 5.36%. What should the price of a call on
the EURMAD, that has the same strike price and expiration as the put, be?
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