A 4-Month,$25 Call Option on Teller Stock Has an Option

question 3

Multiple Choice

A 4-month,$25 call option on Teller stock has an option premium of $0.25.The 4-month,$25 put option has an option premium of $0.80.The risk-free rate is 3 percent.The options are European-style.What is the price of Teller stock?

• A) $24.20
• B) $24.53
• C) $24.62
• D) $25.97
• E) $26.08

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Definitions:

Charter

A charter is a legal document that establishes a corporation or municipality, outlining its rights, privileges, and operations.

Promoters of a Corporation

Individuals or entities involved in the creation and organization of a corporation, including raising capital and completing legal formalities before registration.

Formal Documents

Official papers that follow a specific format or standard, often used for legal, official, or ceremonial purposes.

Solicit Capital

The act of requesting funding or investment from individuals or organizations, typically for business operations or projects.