Questions from Business Statistics

Q: What is a lower bound for the price of a 4-

What is a lower bound for the price of a 4-month call option on a non-dividend-paying stock when the stock price is $28, the strike price is $25, and the risk-free interest rate is 8% per annum?

Q: What is a lower bound for the price of a 1-

What is a lower bound for the price of a 1-month European put option on a non-dividend- paying stock when the stock price is $12, the strike price is $15, and the risk-free interest rate is 6% per ann...

Q: The price of a non-dividend-paying stock is $

The price of a non-dividend-paying stock is $19 and the price of a 3-month European call option on the stock with a strike price of $20 is $1. The risk-free rate is 4% per annum. What is the price of...

Q: What is a lower bound for the price of a 6-

What is a lower bound for the price of a 6-month call option on a non-dividend-paying stock when the stock price is $80, the strike price is $75, and the risk-free interest rate is 10% per annum?

Q: The table below gives Treasury zero rates and cash flows on a

The table below gives Treasury zero rates and cash flows on a Treasury bond. Zero rates are continuously compounded. (a) What is the bond’s theoretical price? (b) What is the bond&ac...

Q: What is meant by a protective put? What position in call

What is meant by a protective put? What position in call options is equivalent to a protective put?

Q: What is the difference between a strangle and a straddle?

What is the difference between a strangle and a straddle?

Q: A trader buys a call option with a strike price of $

A trader buys a call option with a strike price of $45 and a put option with a strike price of $40. Both options have the same maturity. The call costs $3 and the put costs $4. Draw a diagram showing...

Q: Explain what CVA and DVA measure.

Explain what CVA and DVA measure.

Q: Use put–call parity to relate the initial investment for a

Use put–call parity to relate the initial investment for a bull spread created using calls to the initial investment for a bull spread created using puts.