A Stock Is Currently Selling for $20

question 52

Multiple Choice

A stock is currently selling for $20.65.A 3-month call option with a strike price of $20 has an option premium of $1.30.The risk-free rate is 2 percent and the market rate is 8 percent.What is the option premium on a 3-month put with a $20 strike price? Assume the options are European style.

• A) $0.00
• B) $0.15
• C) $0.35
• D) $0.55
• E) $0.75

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