Calculate the Price of a European Put Option If the Price

question 12

Multiple Choice

Calculate the price of a European put option if the price of the equivalent European call option is $6 and the share price,exercise price and risk-free rate (continuously compounded) are $30,$28 and 15% p.a. ,respectively.The options have six months to expiry.Assume that put-call parity holds.

• A)$10.02
• B)$2.05
• C)$1.98
• D)$9.95
• E)$2.97

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Definitions:

Breach of Contract

Breaching any terms and conditions that were mutually agreed upon in a legally enforceable agreement.

Time Limit

A specific duration within which a task must be completed or a condition must be met.

UCC

An acronym for the Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.

Breach of Contract

occurs when one party fails to fulfill their obligations under a contract, allowing the other party to seek legal remedies.