Given the following parameters use put-call parity to determine the price of a put option with...
Given the following parameters use put-call parity to determine the price of a put option with the same exercise price.
| Current stock price: | $48.00 |
| Call option exercise price: | $50.00 |
| Sales price of call options: | $3.80 |
| Months until expiration of call options: | 3 |
| Risk free rate: | 2.6 percent |
| Compounding: | Continuous |
A) Price of put option = $5.48
B) Price of put option = $4.52
C) Price of put option = $6.13
Homework Answers
Acording to Put call Parity Theorum
PV of Strike Price + Vc = Vp + Stock Price
PV of STrike Price:
= Strike Price * e^(-r*t)
= $ 50 * e^(-0.026*0.25)
= $ 50 * e^(-0.0065)
= $ 50 * 0.9935
= $ 49.68
Vp = Vc + Stock Price -PV of Strike Price
= $ 3.80 + $ 48.00 - $ 49.68
= $ 2.12
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Given the following parameters use put-call parity to determine
the price of a put option with...
Given the following parameters use put-call parity to determine the price of a put option with...
Given the following parameters use put-call parity to determine the price of a put option with the same exercise price. Show your work. Current stock price: $48.00 Call option exercise price: $50.00 Sales price of call options: $3.80 Months until expiration of call options: 3 Risk free rate: 2.6 percent Compounding: Continuous A) Price of put option = $5.48 B) Price of put option = $4.52 C) Price of put option = $6.13
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