A Stock Is Selling for $62 Per Share

question 15

Multiple Choice

A stock is selling for $62 per share. A call option with an exercise price of $65 sells for $3.85 and expires in three months. The risk-free rate of interest is 2.8 percent per year, compounded continuously. What is the price of a put option with the same exercise price and expiration date?

• A) $6.74
• B) $6.23
• C) $6.67
• D) $6.40
• E) $6.95

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Definitions:

Data

Information and figures compiled for analyzing or referring.

Y-intercept

The point where a line crosses the y-axis of a graph, reflecting the value of the dependent variable when the independent variable is zero.

Regression Equation

A mathematical formula used to predict a dependent variable based on one or more independent variables, illustrating the relationship between them.

Y-Intercept

The point where a line crosses the Y-axis of a graph, representing the value of the dependent variable when all independent variables are zero.