A Stock Is Currently Selling for $20

question 60

Multiple Choice

A stock is currently selling for $20.65. A 3-month call option with a strike price of $20 has an option premium of $1.30. The risk-free rate is 2% and the market rate is 8%. What is the option premium on a 3-month put with a $20 strike price? Assume the options are European style.

• A)$0
• B)$.15
• C)$.35
• D)$.55
• E)$.75

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Definitions:

Transitional Probabilities

The likelihood of moving from one state or condition to another, often used in the context of labor markets, health statuses, or economic conditions.

Promotion

An employee's upward advancement in the hierarchy of an organization.

Vacancy Model

A framework used for understanding or predicting employment vacancies within an organization, focusing on the causes and durations of vacancies and strategies for filling them.

Compensation Level

The amount of money, benefits, and rewards that an organization provides to its employees in exchange for their work and expertise.