The risk-free interest rate is 12 per annum for all, Financial Management

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The risk-free interest rate is 12 per annum for all

1. A four-month European put option on a dividend-paying stock is currently selling for $5. The stock price is $64, the strike price is $60, and a dividend of $0.80 is expected in one month. The risk-free interest rate is 12% per annum for all maturities. What opportunities are there for an arbitrageur?

2. The beta of M Simon Inc., stock is 1.7, whereas the risk-free rate of return is 0.07. If the expected return on the market is 0.14, then what is the expected return on M Simon Inc?

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Financial Management: The risk-free interest rate is 12 per annum for all

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