Problem

The common stock of Triangular File Company is selling at $90. A 26-week call option writt...

The common stock of Triangular File Company is selling at $90. A 26-week call option written on Triangular File’s stock is selling for $8. The call’s exercise price is $100. The risk- free interest rate is 10% per year.

a. Suppose that puts on Triangular stock are not traded, but you want to buy one. How would you do it?


b. Suppose that puts are traded. What should a 26-week put with an exercise price of $100 sell for?

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Solutions For Problems in Chapter 20