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
Problem 1PS
Related questions
Question
J 9
You are working on the options trading desk of FINM Investment Bank. Three-month European call and puts on stock BUSN with strike $60 are selling for $5 and $3, respectively. BUSN is currently trading at $60 and does not pay dividends. The interest rate is 3% p.a.c.c.
Are you able to make an immediate and riskless profit without any out-of-pocket expenses? If so, show all steps and calculations for the entire duration of your strategy.
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