question archive Consider a principle-protected note involving a $1000 principal-value zero-coupon bond with an implied continuously-compounded interest rate of 5%
Consider a principle-protected note involving a $1000 principal-value zero-coupon bond with an implied continuously-compounded interest rate of 5%
Subject:FinancePrice: Bought3
Consider a principle-protected note involving a $1000 principal-value zero-coupon bond with an implied continuously-compounded interest rate of 5%. One component of the position is a call option with a strike price of $40, which was acquired when the stock was selling at $38 per share. If at expiration the stock is selling for $37, what is the gain from this position in dollars?
a.
$49
b.
$300
c.
$50
d.
$0
e.
$251
