Which One of the Following Options Is More Expensive? Show

question 5

Essay

Which one of the following options is more expensive? Show all calculations.
(a) A six- month put that carries a $40 strike price on a share that is currently trading at $35.84, given that the put trades at a 15 percent investment premium; or
(b) A six- month call that carries a $50 strike price on a share that currently trades at $54.75, while the call trades with a 12 percent investment premium?

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Definitions:

Inappropriate Affect

Display of emotions that are unsuited to the situation; a symptom of schizophrenia.

Schizophrenia

A mental disorder characterized by distorted thinking, perceptions, emotions, language, self-awareness, and behavior.

Laughs

An audible expression of amusement or joy, often a physiological response to humor or happiness.

Disturbances in Volition

Alterations or impairments in the ability to make decisions or initiate actions willingly, often seen in psychiatric conditions such as schizophrenia.