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Consider four 5-year European options with different strike price.

The price of a 50-strike call option is higher than the price of a 60-strike call option by $7.

The price of a 50-strike put option is lower than the price of a 60-strike put option by $1.9.

All options are on the same stock and the stock pays dividends continuously at a rate proportional to its price.

Determine the continuously compounded risk-free interest rate

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91416136

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