1) For a European option on a stock, considering put-call parity:

a) The continuously compounded risk-free interest rate is 6%.

b) The continuously compounded dividend rate of the stock is 0.00%.

c) The stock price is $40.00.

d) Time to expiration is 4 months.

**Determine the strike price for which the premium of the call and put options are equal.**

** **

2) A dollar-denominated European call option allows the exchange of $2,600 for 10,000 swiss francs at the end of 1 year. You are given:

a) The spot price of a swiss franc is $0.25

b) The continuously compounded risk free rate for dollars is 0.05.

c) The continuously compounded risk free rate for Swiss francs is 0.04.

d) The volatility of the exchange rate is 0.01.

**Determine the price of the option.**

Subject | Business |

Due By (Pacific Time) | 11/12/2015 02:00 pm |

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