A Call Option with an Exercise Price of $25 and 9

question 14

Multiple Choice

A call option with an exercise price of $25 and 9 months to expiration has a price of $4.92. The stock is currently priced at $26.90, and the risk-free rate is 4.1 percent per year, compounded continuously. What is the price of a put option with the same exercise price and expiration date?

• A) $3.89
• B) $1.57
• C) $1.24
• D) $2.69
• E) $2.26

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Definitions:

Real GDP

Real Gross Domestic Product measures the value of all final goods and services produced within a country's borders in a specific time period, adjusted for inflation.

Equation of Exchange

An economic formula representing the relationship between the money supply, its velocity, the price level, and the volume of transactions in an economy.

Money Supply

The collected amount of financial resources in an economy at a pointed-out time.

Velocity of Money

The speed at which money circulates from one transaction to another, and the frequency at which a single unit of currency is utilized within a specific timeframe.