Thu 20 Oct, 2016 02:20 am
The question is as follows
Assume six-month forward price of XYZ stock is $58. The stock pays no dividends. The six-month continuously compounded rate of interest is 4%. If the price of a put option is $3 what will be the maximum possible exercise price X that is consistent within no arbitrage context?
I know it is solved with upper bound but i'm quiet stuck help would be appreciated!
Sorry. That just sounds like Greek to me, but I wish I understood some of that stuff. I'm invested in index funds with Vanguard only since my retirement in 1998. I take out $2k/month (plus my social security), but my investment stays level. It's been that way since my retirement.