RST, Inc. stock is currently trading for $33 per share. The stock pays no dividends. A...

Question

Question

RST, Inc. stock is currently trading for $33 per share. The stock pays no dividends. A one-year European call option on RST w

Answer 1

Answer #1

Acc to Put call Parity theorum,

Vp = Value of call + PV of STrike Price - Stock Price

PV of Strike Price = Strike Price * e^-rt

= $36 * e^(-0.06*1)

= $36 * e^-0.06

= $36 * 0.9418

= $33.90

Vp = Value of call + PV of STrike Price - Stock Price

= 2.99 + 33.90 - 33

= $ 3.89

Value of Put Option is $ 3.89

Answer 2

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