The Price of a European Call Option on Lululemon Stock

question 53

Multiple Choice

The price of a European call option on Lululemon stock with an exercise price of $34.50 and one year to expiry is trading at $2.52.The current price of the stock is $34,and the risk-free rate is 4%.With no arbitrage,what must be the price of a European put on Lululemon with an exercise price of $34.50?

• A)$3.37
• B)$0.71
• C)$1.69
• D)$2.52
• E)$0.50

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Definitions:

Output

The total amount of goods or services produced by a person, machine, or company within a certain period.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, leading to a decrease in the per unit cost as output increases.

Output

The total amount of goods or services produced by an individual, firm, or country within a given period.

Compact Disc Inputs

Not a standard economic key term, likely refers to inputs required for the production of compact discs as part of a business's operations.