A 4-Month, $30 Call Option on Teller Stock Has an Option

question 49

Multiple Choice

A 4-month, $30 call option on Teller stock has an option premium of $.35. The 4-month, $30 put option has an option premium of $.60. The risk-free rate is 1.1%. The options are European-style. What is the price of Teller stock?

• A)$29.20
• B)$29.53
• C)$29.64
• D)$29.97
• E)$30.08

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Definitions:

Telepathy

A form of communication where information is transferred between individuals without using the known sensory channels or physical interaction.

Clairvoyance

The claimed capacity to acquire knowledge on objects, individuals, sites, or physical occurrences through channels beyond the conventional human senses.

Precognition

The purported ability to perceive or predict future events before they happen, a phenomenon not supported by scientific evidence.

Lightness Constancy

The perception that the whiteness (lightness) of an object remains the same under varying illumination conditions.