Problem

5. Stock ABC is trading at a price of $50. At a strike price of 55, there is a traded six-...

5. Stock ABC is trading at a price of $50. At a strike price of 55, there is a traded six-month American put. There are no dividends on the stock, and maturity of the option is a half year. If the half-year rate of interest is 5%, what must the minimum insurance value of the put be for the put not to be exercised?

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Solutions For Problems in Chapter 10