Questions from Business Statistics

Q: Suppose you observe a one-year cash-or-nothing

Suppose you observe a one-year cash-or-nothing digital call option trading for $0.48 and an equivalent cash-or-nothing digital put option trading for $0.45. Calculate the implied interest rate (annual...

Q: Which of the following combinations of exchanges is not part of the

Which of the following combinations of exchanges is not part of the same entity? a. Chicago Mercantile Exchange and Chicago Board Options Exchange b. New York Stock Exchange and London International...

Q: Suppose you are an individual investor with an options account at a

Suppose you are an individual investor with an options account at a brokerage firm. You purchase 20 call contracts at a price of $2.25 each on an options exchange. Explain who gets your premium.

Q: Consider an option that expires in 68 days. The bid and

Consider an option that expires in 68 days. The bid and ask discounts on the Treasury bill maturing in 67 days are 8.24 and 8.20, respectively. Find the approximate risk-free rate.

Q: Why does the justification for exercising an American call early not hold

Why does the justification for exercising an American call early not hold up when considering an American put? The following option prices were observed for a stock on July 6 of a particular year. Use...

Q: Compute the intrinsic values, time values, and lower bounds of

Compute the intrinsic values, time values, and lower bounds of the following calls. Identify any profit opportunities that may exist. Treat these as American options for purposes of determining the in...

Q: Compute the intrinsic values, time values, and lower bounds of

Compute the intrinsic values, time values, and lower bounds of the following puts. Identify any profit opportunities that may exist. Treat these as American options for purposes of determining the int...

Q: The three fundamental profit equations for call, puts, and stock

The three fundamental profit equations for call, puts, and stock are identified symbolically in this chapter as Prepare a single graph showing both the long and short for each profit equation above....

Q: Check the following combinations of puts and calls and determine whether they

Check the following combinations of puts and calls and determine whether they conform to the put–call parity rule for European options. If you see any violations, suggest a strategy. a. July 155 b....

Q: Repeat problem 13 using American put–call parity, but do

Repeat problem 13 using American put–call parity, but do not suggest a strategy.