Shares of ana corp are trading at 50 the stock does not pay, Ask an Expert

Finance

Shares of ANA Corp. are trading at $50. The stock does not pay dividends. The price of a three-month put with an exercise price of $50 is currently $4 (per share).

a. If the risk-free rate of interest is 10%, calculate the price of an “at the money” call (with a strike price also of $50)?

b. If you believe that ANA Corp. shares will continue to trade close to $50 for the next three months, what would be a simple options strategy using a put and a call to profit from your conviction? What is the most money you could make from it? How far can the stock move in either direction before you lose money?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92767259

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