Use the Following Information to Answer the Question(s)below

question 27

Multiple Choice

Use the following information to answer the question(s) below.
Consider an American put option on Rearden Metal stock with a strike price of $60 and one year to expiration.Assume that Rearden pays no dividends,its stock is currently trading at $15 per share,and the one-year interest rate is 5%.Also assume that it is optimal to exercise this put option early.
-The price of a one-year American put option on Rearden Metal with a strike price of $70 per share is closest to:

• A)$45.
• B)$50.
• C)$55.
• D)$60.