The Price of a European Call Option on a Non-Dividend-Paying

question 8

Multiple Choice

The price of a European call option on a non-dividend-paying stock with a strike price of $50 is $6.The stock price is $51,the continuously compounded risk-free rate (all maturities) is 6% and the time to maturity is one year.What is the price of a one-year European put option on the stock with a strike price of $50?

• A) $9.91
• B) $7.00
• C) $6.00
• D) $2.09

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Definitions:

KCl

Potassium chloride, a metal halide salt composed of potassium and chlorine, used in various applications including as a fertilizer.

Non-polar Solvent

A non-polar solvent is a liquid phase solvent without significant positive or negative charges, used to dissolve non-polar compounds.

Saquinavir

An HIV protease inhibitor used in the treatment of HIV/AIDS.

HIV Protease Inhibitor

A class of antiviral drugs used in the treatment of HIV/AIDS, designed to prevent viral replication by selectively binding to and inhibiting the protease enzyme.