Both questions relate to forward start options.
That said, solution to Q19 discounts the S(t) to S(0) but not in Q33. Even though the full payment is due now, wouldn't the discount apply?
So instead of .015866 x 4 x S(0) = 2.86, it would be .015866 x S(0) x (1+e^-.02+e^-.04+e^-.06) = 2.77
Also, very off topic but, isn't buying the one year option be cheaper (approximately 2.00) since full payment is due now under the rolling strategy
That said, solution to Q19 discounts the S(t) to S(0) but not in Q33. Even though the full payment is due now, wouldn't the discount apply?
So instead of .015866 x 4 x S(0) = 2.86, it would be .015866 x S(0) x (1+e^-.02+e^-.04+e^-.06) = 2.77
Also, very off topic but, isn't buying the one year option be cheaper (approximately 2.00) since full payment is due now under the rolling strategy
Sample Q19 vs Q33
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