What Is the Put Option Premium Given the Following Information

question 73

Multiple Choice

What is the put option premium given the following information?
$\begin{array}{lrr} \text { Stock price } &\$17\\ \text { Strike price } &\$22\\ \text { Volatility } &25\%\\ \text {Dividend Yield } &1.1\%\\ \text { Time (years) } &0\%\\ \text { Risk-free Rate } &.25\\\end{array}$

• A)$3.98
• B)$4.32
• C)$4.59
• D)$4.96
• E)$5.18

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Definitions:

Availability Heuristic

A cognitive shortcut that relies on the immediate examples that come to a person’s mind when evaluating a specific topic, concept, method or decision.

Representative Heuristic

A mental shortcut that involves making a probability judgement by comparing an object or event to a prototype of the object or event.

Additive Strategy

An approach where elements are added together to solve problems or make decisions, often seen in mathematics or decision-making processes.

Anchoring

Overestimation of the importance of a factor by focusing on it to the exclusion of other relevant factors.