Quiz 3

Solution :-
C(K ,T) - P(K ,T) = S0 – PV0,T(dividends) - K e –r T
6
For finding PV0,T(dividends) we discount 2 for 4 months at 4% or (2)e−0.04 × 12
6 6
1.62 - P(50,0.5) = 50 - (2)e−0.04 × 12 – 50 e−0.04 ( 12 )

1.62 - P(50,0.5) = 50 – 1.9603973 – 49.0099

1.62 - P(50,0.5) = - 0.97033
1.62 + 0.99661 = P(50,0.5)
P(50,0.5) = 2.59033