A stock price is $103 per share, exercise price of the options is $100 per share, all options are European and the stock does not pay any dividend. Option contracts are written on 100 shares of stock and mature in 6 months. The call price is $9 per share and the put price is $4 per share.
1. Use the put and call options and the underlying stock to create a portfolio which will let you borrow $10,000 (face amount) for 6 months through the financial markets.
2. What is the rate of interest on the money that you borrow in 1) Give this rate per annum with continuous compounding.