Interest Rate

1. A trader write a June put option with a trike price of $\$20$. The price of the option is $\$3$. Under what circumstances does the trader make a gain?


2. A bank quotes you an interest rate of $13\%$ per annum with quaterly compounding. What is the equivalent rate with (a) continuous compounding and (b) annual compounding?


3. An investor receives $\$110$ in one year in return for an investment of $\$100$ now.
   
   Calculate the percentage return per annum with:
   
   
   1. Annual compounding
   2. semiannual compounding
   3. Monthly compounding
   4. Continuous compounding