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

question 56

Multiple Choice

Consider a one-year maturity call option and a one-year put option on the same stock, both with striking price $100. If the risk-free rate is 5%, the stock price is $103, and the put sells for $7.50, what should be the price of the call?

• A) $17.50
• B) $15.26
• C) $10.36
• D) $12.26
• E) None of the options.

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Definitions:

Control

The power to influence or direct people's behavior or the course of events, often studied as a trait that contributes to psychological well-being when effectively balanced.

Locus of Control

A psychological concept referring to an individual's belief about how much control they have over the outcomes of events in their lives, ranging from internal (a belief in personal control) to external (a belief that outside forces dominate).

Mental Health

A condition where an individual is in good health, acknowledges personal capabilities, handles life's usual stresses well, contributes positively to work, and actively supports the community.

Five-Factor Model

A theory that describes human personality through five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.