To Compute the Value of a Put Using the Black-Scholes

question 75

Multiple Choice

To compute the value of a put using the Black-Scholes option pricing model, you:

• A)first have to apply the put-call parity relationship.
• B)first have to compute the value of the put as if it is a call.
• C)compute the value of an equivalent call and then subtract that value from one.
• D)compute the value of an equivalent call and then subtract that value from the market price
• Of the share.
• E)compute the value of an equivalent call and then multiply that value by e-RT.

---

Definitions:

Base Value

A reference or initial value used for comparison or calculation purposes in finance and economics.

Rate of Decrease

A measure of how quickly a quantity is diminishing over time, often expressed as a percentage or a ratio.

Percentage

A portion or share expressed as a fraction of 100, commonly used to compare differences in quantities.

Percentage

A rate, number, or amount in each hundred, represented by the symbol %.