Consider a One-Year Maturity Call Option and a One-Year Put

question 47

Multiple Choice

Consider a one-year maturity call option and a one-year put option on the same stock, both with striking price $45. If the risk-free rate is 4%, the stock price is $48, and the put sells for $1.50, what should be the price of the call?

• A) $4.38
• B) $5.60
• C) $6.23
• D) $12.26
• E) None of the options.

Recognize the necessity of comprehensive services and the avoidance of service duplication.

Acknowledge the importance of follow-up and the termination phase in case management.

Understand the concepts of direct and indirect quotes in the currency exchange process.

Analyze the effects of currency strength on forward and spot rates.

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Definitions:

Discarding

The act of getting rid of something that is no longer useful or desired, within a context like inventory management or manufacturing.

Fixed Assets

Permanent tangible properties engaged in business operations, which are unlikely to be used up or exchanged for cash in the span of a year.

Goodwill

An intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.

Competitive Advantage

An advantage that allows a business to generate greater sales or margins compared to its market competitors, often through unique resources, capabilities, or efficiencies.