A call option with an exercise price of $25 and four months to expiration has a...

Question

Question

A call option with an exercise price of $25 and four months to expiration has a price of $2.75. The stock is currently priced

Answer 1

Answer #1

Using put-call parity formula

C+PV(x) =P + S

where C= call price ; PV(x) = present value of strike price ; S=spot price ; P= put price

PV(x) =25/e^rt

r=2.5% ; t=4/12 years =1/3 years ; rt=.00833

PV(x)=24.79

substituting in the equation

2.75+ 24.79 =P +23.8

P=3.74 $ ---- put option price

Add a comment

Answer 2

Similar Homework Help Questions

A call option with an exercise price of $70 and three months to expiration has a...

A call option with an exercise price of $70 and three months to expiration has a price of $4.10. The stock is currently priced at $69.80, and the risk-free rate is 5 percent per year, compounded continuously. What is the price of a put option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Put option price $
A put option that expires in six months with an exercise price of $45 sells for...

A put option that expires in six months with an exercise price of $45 sells for $2.34. The stock is currently priced at $48, and the risk-free rate is 3.5 percent per year, compounded continuously. What is the price of a call option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call priceſ A call option with an exercise price of $70 and four months to expiration has...
A put option that expires in six months with an exercise price of $45 sells for...

A put option that expires in six months with an exercise price of $45 sells for $4.80. The stock is currently priced at $41, and the risk-free rate is 3.3 percent per year, compounded continuously. What is the price of a call option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A put option and a call option with an exercise price of $70 expire in four...

A put option and a call option with an exercise price of $70 expire in four months and sell for $.94 and $5.70, respectively. If the stock is currently priced at $73.20, what is the annual continuously compounded rate of interest? (Do not round intermediate calculations. Enter your answer as a percent rounded 2 decimal places, e.g., 32.16.)
Problem 22-8 Put-Call Parity A put option and a call option with an exercise price of...

Problem 22-8 Put-Call Parity A put option and a call option with an exercise price of $75 and three months to expiration sell for $1.35 and $5.70, respectively. If the risk-free rate is 4.4 percent per year, compounded continuously, what is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price
A call option has an exercise price of $70 and matures in six months. The current...

A call option has an exercise price of $70 and matures in six months. The current stock price is $73, and the risk-free rate is 5 percent per year, compounded continuously. What is the price of the call if the standard deviation of the stock is O percent per year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call option price

Problem 22-6 Put-Call Parity A stock is currently selling for $73 per share. A call option...

Problem 22-6 Put-Call Parity A stock is currently selling for $73 per share. A call option with an exercise price of $77 sells for $3.65 and expires in three months. If the risk-free rate of interest is 3.3 percent per year, compounded continuously, what is the price of a put option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Put price
A put option and a call option with an exercise price of $65 expire in three...

A put option and a call option with an exercise price of $65 expire in three months and sell for $.92 and $5.50, respectively. if the stock is currently priced at $68.38, what is the annual continuously compounded rate of Interest? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 3216.) Rate of interest
A put option that expires in three months with an exercise price of $50 sells for...

A put option that expires in three months with an exercise price of $50 sells for $4.89. The stock is currently priced at $53, and the risk-free rate is 4.8 percent per year, compounded continuously. What is the price of a call option with the same exercise price? (Answer up to two decimal places)

A put option that explres in six months with an exercise price of $54 sells for...

A put option that explres in six months with an exercise price of $54 sells for $4.79. The stock is currently priced at $57, and the risk-free rate is 3.1 percent per year, compounded continuously. What is the price of a call option with the same exercise price? Multiple Choice $8.32 $8.97 $7.98 5.96 58 62