Problemfedex is selling for 100 a share a fedex call option, Ask an Expert

Accounting

Problem:

FedEx is selling for $100 a share. A FedEx call option with one month until expiration and an exercise price of $105 sells for $2 while a put with the same strike and expiration sells for $6.94.

Required:

Question 1: What is the market price of a zero-coupon bond with face value $105 and 1 month maturity?

Question 2: What is the risk-free interest rate expressed as an effective annual yield?

Note: Please explain in detail.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167073

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