1. It is possible to buy three-month call options and three-month puts on stock Q. Both options have an exercise price of $60 and both are worth $10. If the interest rate is 5% a year, what is the stock price? ( Hint: Use put–call parity.)
2. In January 2009, a one-year call on the stock of Amazon.com, with an exercise price of $45.00, sold for $19.55. The stock price was $55. The risk-free interest rate was 2.5%. How much would you be willing to pay for a put on Amazon stock with the same maturity and exercise price? Assume that the Amazon options are European options. ( Note: Amazon does not pay a dividend.)
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