1. Using Put-Call parity, calcluate the implied dividend yield for

Using Put-Call parity, calcluate the implied dividend yield for Sears Hold- ing, with S0 = $11.49, a time to expiry (292/365) years, a strike of $10, ...

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1. Using Put-Call parity, calcluate the implied dividend yield for Sears Holding, with S0 = $11.49, a time to expiry (292/365) years, a strike of $10, and a risk free rate of 1.65% if calls are trading at $2.50 and puts at $4.15. (a) If the borrow rate, b, (that is, the cost to short the stock) can be approximated by qi = q0 + b for implied dividend qi and current stock dividend yield indicated by the price q0 , what is the implied borrowed rate if Sears has no dividend? (b) If the borrow rate in the market is 109%, is there a trade indicated above? If so, what is it and why? 2. Hull 29.21 3. Hull 29.22 4. Hull 29.23

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