ZuoTi.Pro
Question

The 1-year $51 options on Nest stock are priced at $1.49 for the call and $1.27...

The 1-year $51 options on Nest stock are priced at $1.49 for the call and $1.27 for the put. The annual risk-free rate is 3 percent. What is the per share price of the underlying stock? (Hint: use the put-call parity to determine the share price)

$51.00

$50.25

$50.67

$48.86

$49.73
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

According to the Put-Call Parity;

C + [X / (1 + r)] = P + S

$1.49 + [$51 / 1.03] = $1.27 + S

S = $1.49 + $49.51 - $1.27 = $49.73

Hence, Option "E" is correct.

0 0
Add a comment
Know the answer?
Add Answer to:
The 1-year $51 options on Nest stock are priced at $1.49 for the call and $1.27...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The 1-year $42 options on Agrium stock are priced at $1.54 for the call and $0.97...

    The 1-year $42 options on Agrium stock are priced at $1.54 for the call and $0.97 for the put. The annual risk-free rate is 3 percent. What is the per share price of the underlying stock? (Hint: use the put-call parity to determine the share price) $41.35 $43.19 $45.27 $47.64 $49.13

  • The 1-year $42 options on Lowell Star stock are priced at $1.43 for the call and...

    The 1-year $42 options on Lowell Star stock are priced at $1.43 for the call and $.57 for the put. The annual risk-free rate is 3.5 percent. What is the per share price of the underlying stock? $45.73 $41.44 $38.42 $35.09 $32.74

  • Webster United stock is priced at $35.79 per share. The 6-month $35 call options are priced...

    Webster United stock is priced at $35.79 per share. The 6-month $35 call options are priced at $1.40 and the risk-free rate is 3.2 percent, compounded continuously. What is the per share value of the 6-month put option?

  • 8. The five factors affecting prices of call and put options Both call and put options...

    8. The five factors affecting prices of call and put options Both call and put options are affected by the following five factors: the exercise price, the underlying stock price, the time to expiration, the stock’s standard deviation, and the risk-free rate. However, the direction of the effects on call and put options could be different. Use the following table to identify whether each statement describes put options or call options: Statement Put Option Call Option 1. An increase in...

  • Consider European call and pit on a non dividend paying stock; both for T=1yr. The stock...

    Consider European call and pit on a non dividend paying stock; both for T=1yr. The stock price is $45/share and k=$45/share for both options. The call premium is equal to the put premium c=p= $7/share. The annual risk-free rate is 10%. Use the put-call parity and show that there exist an arbitrage opportunity. Also, show the complete table of cash flows and P/L at the options expiration of a strategy that will create the arbitrage profit in Q2.

  • Q29) The common stock of WIN is currently priced at $52.50 a share. One year from...

    Q29) The common stock of WIN is currently priced at $52.50 a share. One year from now, the stock price is expected to be either $54 or $60 a share. The risk-free rate of return is 4 percent. What is the per share value of one call option on WIN stock with an exercise price of $55? $.51 $.45 $.48 $.39 $.41

  • The following prices are available for call and put options on a stock priced at $50....

    The following prices are available for call and put options on a stock priced at $50. The risk-free rate is 6 percent and the volatility is 0.35. The March options have 90 days remaining and the June options have 180 days remaining. The Black-Scholes model was used to obtain the prices. Calls Puts Strike March June March June 45 6.84 8.41 1.18 2.09 50 3.82 5.58 3.08 4.13 55 1.89 3.54 6.08 6.93 Use this information to answer questions 1...

  • Suppose that a call option with a strike price of $48 expires in one year and...

    Suppose that a call option with a strike price of $48 expires in one year and has a current market price of ​$5.15. The market price of the underlying stock is ​$46.24​, and the​ risk-free rate is 1​%. Use​ put-call parity to calculate the price of a put option on the same underlying stock with a strike of ​$48 and an expiration of one year. 1. The price of a put option on the same underlying stock with a strike...

  • Check my work A put option on a stock with a current price of $51 has...

    Check my work A put option on a stock with a current price of $51 has an exercise price of $53. The price of the corresponding call option is $4.95. According to put-call parity, if the effective annual risk-free rate of interest is 6% and there are four months until expiration, what should be the price of the put? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 1.15 points Price of the putſ 8 03:51:07 Skipped...

  • On October 2, 2018, Tesla stock was trading $305.65. There are options on Tesla stock, Below...

    On October 2, 2018, Tesla stock was trading $305.65. There are options on Tesla stock, Below are the yarigble inputs you require. Using the Black-Scholes-Merton model and Solyer, solve for the implied volatility that causes the option to be valued at $44.25. The appropriate risk free rate c.c. is 0.85%. These are European Options. Underlying So Call or Put Strike 306.65 Put 300.00 10/2/18 3/15/19 Today Maturity Time to Expiration Volatility Risk Free Rate 59.52% 0.85% #N/ A #N/A #N/A...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT