A Call Option with 6 Months to Expiration Currently Sells

question 33

Multiple Choice

A call option with 6 months to expiration currently sells for $2.05.A put option with the same expiration sells for $0.60.The options are European style.The risk-free rate is 3.0 percent and the strike price of both options is $50.What is the current stock price?

• A) $47.89
• B) $49.19
• C) $50.72
• D) $51.29
• E) $52.08

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Definitions:

Level Of Significance

The probability of rejecting the null hypothesis when it is true, typically set as a threshold like 0.05 or 0.01 before conducting a hypothesis test.

Sample Size

Refers to the number of observations or elements selected from a population to conduct a study.

Population Proportion

A fraction or percentage that represents a part of the total population sharing a particular characteristic or attribute.

Sample Proportion

The fraction or percentage of the sample that represents a particular trait or characteristic.