Economics The Terminal Value of A Portfolio – Describe the terminal value

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QU Economics The Terminal Value of A Portfolio Questions

10.11. Describe the terminal value of the following portfolio: a newly entered-into long forward contract on an asset and a long position in a European put option on the asset with the same maturity as the forward contract and a strike price that is equal to the forward price of the asset at the time the portfolio is set up. Show that the European put option has the same value as a European call option with the same strike price and maturity.

10.18. ‘‘If most of the call options on a stock are in the money, it is likely that the stock price has risen rapidly in the last few months.’’ Discuss this statement

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