Suppose a Stock Is Currently Trading for $12,and in One

question 91

Multiple Choice

Suppose a stock is currently trading for $12,and in one period it will either increase to $15 or decrease to $8.If the one-period risk-free rate is 4%,what is the price of a European put option that expires in one period and has an exercise price of $10?

• A)$0.96
• B)$1.92
• C)$1.00
• D)$2.00
• E)$0.69

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