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

---

Definitions:

Anion

A particle with one or more units of negative charge, such as a chloride ion (Cl-) or hydroxide ion (OH-). Compare with cation.

Isotopes

Atoms of the same element that differ in the number of neutrons within their nuclei.

Ions

Atoms or molecules that have gained or lost one or more electrons, thus acquiring a charge.

Acid

A substance that is a hydrogen ion (proton) donor; acids unite with bases to form salts. Compare with base.