A Stock Is Currently Selling for $21

question 28

Multiple Choice

A stock is currently selling for $21. A 3-month call option with a strike price of $20 has an option premium of $1.30. The risk-free rate is 3% 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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