1

Question8 4 points Current stock price $55 Option time to maturity-0.5 Option exercise price- $60 Interest...

Question

Question8 4 points Current stock price $55 Option time to maturity-0.5 Option exercise price- $60 Interest...

Question8 4 points Current stock price $55 Option time to maturity-0.5 Option exercise price- $60 Interest rate-10% Call pric

Question8 4 points Current stock price $55 Option time to maturity-0.5 Option exercise price- $60 Interest rate-10% Call price $3 Given the data above what is the price of a Put option with the same strike and time to maturity as the call option above? O a. $3.43 b. $6.09 О с. $5.07 d. $9.67

Answers

As per put call parity theory

Value of call option + Present Value of excercise price = Value of put option + Current market price

Value of call option = $3

Excercise price = $60

Time = 0.5

Interest rate = 10%

Interest rate for 0.5 period (r) = 10% *0.5 = 5%

Continuous compounding rate (e^0.05) or (1+r) =1.05127109638

So, P.V. of E.P. = excercise price/(1+r)

60/1.05127109638

=57.07376547

Current market price = $55

So, as per put call parity

3 + 57.07376547 = Value of put+55

Value of put = 60.07376547 - 55

=5.07376547

So, Value of put option is $5.07

note (1)

e^0.05 = 1 +. ( (0.05)^1) /1 + ((0.05)^2 / (2*1)) + ((0.05)^3 / (3*2*1)) + ((0.005)^4 / (4^3*2*1)

= 1.051271096

Please thumbs up.


Similar Solved Questions

2 answers
Hitomi has a total of 30 red and blue bowling balls at her bowling alley
Hitomi has a total of 30 red and blue bowling balls at her bowling alley. Each red ball weighs 8 lb. Each blue ball weighs 9 lb. If the total mass of the blue balls is 49 lb. heavier than the total mass of the red balls, how many red balls does she have?...
1 answers
2n 1 Π=0 2. Determine whether the series converges, and if so, find its sum. (1)...
2n 1 Π=0 2. Determine whether the series converges, and if so, find its sum. (1) Σ3-agn+1 (3) Σ(-3) η(η - 1) 3 (4) Σ (5) ΣIn ρ2n (6) Σ[arctan(n + 1) - arctan n] η +1 n? +4 1+ 2η 1 (7) ΣIn (8) Σ 2n2 +1 (9) η2 (η + 1)2. 1 η C...
1 answers
Predict the relative reducing power of the group 2A elements. Note: 1 strongest reducing agent:5 =...
Predict the relative reducing power of the group 2A elements. Note: 1 strongest reducing agent:5 = weakest reducing agent Sr [Select] Ca [Select Mg Select] Ba [Select]...
1 answers
The following data are from the accounting records of Niles Castings for year 2: Units produced...
The following data are from the accounting records of Niles Castings for year 2: Units produced and sold 84,000 Total revenues and costs Sales revenue $ 280,000 Direct materials costs 65,000 Direct labor costs 32,000 Variable manufacturing overhead 16,000 Fixed man...
1 answers
Problem 10-12 Acquisition costs; lump-sum acquisition; noninterest-bearing note; interest capitalization [LO10-1,10-2, 10-3, 10-7] Early in its...
Problem 10-12 Acquisition costs; lump-sum acquisition; noninterest-bearing note; interest capitalization [LO10-1,10-2, 10-3, 10-7] Early in its fiscal year ending December 31, 2018 San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchas...
1 answers
The Fed has recently conducted a number of policies aimed to lower interest rates. In fact,...
The Fed has recently conducted a number of policies aimed to lower interest rates. In fact, the federal funds rate, in an emergency decision, was decreased to a target range of 0- 0.25% and they are purchasing longer term securities in an attempt to lower other interest rates. Do you expect these ch...
1 answers
Burnout __________. Group of answer choices occurs more often in routine, physically demanding jobs is associated...
Burnout __________. Group of answer choices occurs more often in routine, physically demanding jobs is associated with excessive feedback from supervisors occurs more often in the helping professions is associated with a lack of work assignments to fill the day...
1 answers
Utron (mass=1) collides head-on, at speed u, with a nucleus of mass A at rest. The...
utron (mass=1) collides head-on, at speed u, with a nucleus of mass A at rest. The tron rebounds with speed v'. If the collision is elastic (energy is conserved) show that = (A-1)/(A+1), thus verifying Equation (11-1)....
1 answers
Q4. For each of the following scenarios describe what happens in normal cells and cells with...
Q4. For each of the following scenarios describe what happens in normal cells and cells with the perturbation A. A cell that has no functional flippasesi 1 B. A membrane that contains only saturated fatty acids in glycerophospholipids and sphingolipids. C. Chymotrypsin with serine 195 mutated to tyr...
1 answers
Use the inscribed polygon method and determine ___ for the compound below.
Use the inscribed polygon method and determine ___  for the compound below.a. number of electrons contained in the bonding \(\mathrm{M.O.s}\)b. number of electrons contained in the antibonding \(\mathrm{M} . \mathrm{O.S}\)c. number of electrons in the nonbonding \(\mathrm{M} . \mathrm{O} ....
1 answers
Test the given claim. Identify the null hypothesis, alternative hypothesis, test statistic, P-value, and then state...
Test the given claim. Identify the null hypothesis, alternative hypothesis, test statistic, P-value, and then state the conclusion about the null hypothesis, as well as the final conclusion that addresses the original claim. Among 2001 passenger cars in a particular region. 220 had only rear license...
1 answers
Client is hearing impaired...wears hearing aids... Wants to work in a setting where he/she will need...
Client is hearing impaired...wears hearing aids... Wants to work in a setting where he/she will need do blood pressure checks with traditional stethoscope... Is there a modification out there? Our resnonse and...
1 answers
What are the structural and functional differences between the anatomical and surgical necks of the humerus?...
What are the structural and functional differences between the anatomical and surgical necks of the humerus? Construct a unique mnemonic to assist with recall of the carpal bones. Write the mnemonic here:...
1 answers
Rls) J s2 Eguati en feonn - aboueS uride pactial fractien expansien fer vhe ramp input B as-the res.de es usina--Aー& B:t- 5 Det ne he tem esp rrsDonSe c Rls) J s2 Eguati en feonn - aboue...
Rls) J s2 Eguati en feonn - aboueS uride pactial fractien expansien fer vhe ramp input B as-the res.de es usina--Aー& B:t- 5 Det ne he tem esp rrsDonSe c Rls) J s2 Eguati en feonn - aboueS uride pactial fractien expansien fer vhe ramp input B as-the res.de es usina--Aー& B:t- 5 ...

-- 0.008751--