We have to do this question by put-call parity Ques 78: Spot price+ put price= fiduciary call (call + Bond ) 97+4=101 Ques 79: spot price+ put price = call price + value of bond today (Face value-Exercise price) 97+4+Call price + 100/(1.05)^(3/12) Call price= 2.21
We have to do this question by put-call parity
Ques 78:
Spot price+ put price= fiduciary call (call + Bond )
97+4=101
Ques 79:
spot price+ put price = call price + value of bond today (Face value-Exercise price)
We don't include finance cost, as in the discount rate we already have incorporated for the interest, so if we also deduct the interests from the cash flows and discount it again from a interest rate ( which has already considered interest cost) then it would lead to double counting. Thus, fiRead more
We don’t include finance cost, as in the discount rate we already have incorporated for the interest, so if we also deduct the interests from the cash flows and discount it again from a interest rate ( which has already considered interest cost) then it would lead to double counting.
Q.78 and 79
We have to do this question by put-call parity Ques 78: Spot price+ put price= fiduciary call (call + Bond ) 97+4=101 Ques 79: spot price+ put price = call price + value of bond today (Face value-Exercise price) 97+4+Call price + 100/(1.05)^(3/12) Call price= 2.21
We have to do this question by put-call parity
Ques 78:
Spot price+ put price= fiduciary call (call + Bond )
97+4=101
Ques 79:
spot price+ put price = call price + value of bond today (Face value-Exercise price)
97+4+Call price + 100/(1.05)^(3/12)
Call price= 2.21
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We don't include finance cost, as in the discount rate we already have incorporated for the interest, so if we also deduct the interests from the cash flows and discount it again from a interest rate ( which has already considered interest cost) then it would lead to double counting. Thus, fiRead more
We don’t include finance cost, as in the discount rate we already have incorporated for the interest, so if we also deduct the interests from the cash flows and discount it again from a interest rate ( which has already considered interest cost) then it would lead to double counting.
Thus, finance cost is not included.
Other options are correct
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