European calls, puts value with strike and expiration value
Explain the relationship between the European calls, puts value with similar strike and expiration value.
Expert
C − P = S − Ke−r(T−t)
This relationship, in among European calls (value C) and puts (value P) with similar strike (K) and expiration (T) valued at time t is an effect of a simple arbitrage argument. When you buy a call option, at similar time write a put and sell stock short. When the stock is above the strike at expiration therefore you will have S − K by the call, 0 by the put and −S by the stock. A total sum of −K. If the stock is below the strike at expiration you will have 0 from the call, −S again from the stock, and −(K − S) from the short put. Again a total sum of −K. Therefore, whatever the stock price is at expiration such portfolio will all the times be worth −K, a guaranteed amount. Because this amount is guaranteed we can discount this back to the present. We should have C − P − S =−Ke−r(T−t).
This is put–call parity.
Consider 8.5 % Swiss franc/U.S. dollar dual currency bonds which pay $666.67 at maturity per SF1,000 of par value. Describe implicit SF/$ exchange rate at maturity? Will the investor be better or worse off at maturity if the real SF/$ exchange rate
Explain boundary/final conditions in Monte Carlo method.
Within win32 application when defining a variable of CString then this provides the error "CString:Undeclared identifier" so how to solve the problems? What headerfile require including?
How is marking to market straightforward?
How is Poisson process defined?
How is Sharpe ratio slope of the risk-free investment?
How is Crash Metrics deal?
Give an example of restrictive covenants that could be given in a bond’s indenture?
From books of Aggarwal Bors, following information has been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax
Describe how exchange rate fluctuations influence the return from a foreign market measured in dollar terms. Describe the empirical evidence on the effect of exchange rate uncertainty on the risk of foreign investment.Mostly exchange rate fluctu
18,76,764
1951283 Asked
3,689
Active Tutors
1436652
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!