What Is the Put Option Premium Given the Following Information

question 44

Multiple Choice

What is the put option premium given the following information?
$\begin{array}{lr}\text { Time (years) } & .5 \\\text { Strike price } & \$ 35.00 \\\text { Stock price } & \$ 33.00 \\\text { Risk-free rate } & 2.20\% \\\text { Volatility } & 35\%\end{array}$

• A)$1.58
• B)$2.01
• C)$2.59
• D)$3.96
• E)$4.20

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Definitions:

Marginal Propensity to Consume

The ratio of change in consumption to the change in disposable income, indicating how much income will be spent rather than saved.

Investment

Investment involves allocating resources, such as capital or time, in the expectation of generating a profit or benefit in the future.

Interest Rates

A charge, calculated as a percentage of the principal, demanded by a lender from a borrower for assets' usage.

Disposable Income

Income that remains for saving or spending after direct taxes (such as income tax) have been deducted from an individual's earnings.