ING Stock Currently Sells for $38

question 34

Multiple Choice

ING Stock currently sells for $38. A one-year call option with strike price of $45 sells for $9, and the risk-free interest rate is 4%. What is the price of a one-year put with strike price of $45?

• A) $9.00
• B) $12.89
• C) $16.00
• D) $18.72
• E) $14.27

---

Definitions:

Expected Return

This is the average amount of profit or loss an investor can expect on an investment, calculated based on historical data or subjective probabilities.

Risky Securities

Financial instruments that carry a higher risk of losing the principle due to volatile market conditions but potentially offer higher returns.

Weighted Average

This is an average in which each quantity to be averaged is assigned a weight, reflecting its importance.

Variances

Statistical measures that represent the degree of spread or dispersion of a set of values around their mean, commonly used to quantify risk in finance.