A One Year Call Option Has a Strike Price of 60,expires

question 13

Multiple Choice

A one year call option has a strike price of 60,expires in 6 months,and has a price of $2.5.If the risk free rate is 7%,and the current stock price is $55,what should the corresponding put be worth?

• A) $5.00
• B) $4.56
• C) $5.50
• D) $7.08
• E) $7.54

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Definitions:

Direct Labor-Hours

The amount of time spent by workers directly involved in manufacturing a product or delivering a service.

Raw Materials

The basic substances in their natural, modified, or semi-processed states used as inputs for manufacturing processes.

Selling and Administrative Expense

Costs related to the selling of products and the administration of a business.

Budgeted Unit Sales

The projected amount of sales in units that a company plans to achieve in a specific period.