Consider the Following Data for a European Option: Expiration =

question 12

Multiple Choice

Consider the following data for a European option: Expiration = 6 months; Stock price = $80; Exercise price = $75; Call option price = $12; Risk-free rate = 5% per year.Using put-call parity,calculate the price of a put option having the same exercise price and expiration date.

• A)$3.07
• B)$5.19
• C)$11.43
• D)$3.42Value of put = value of call - share price + PV of exercise price

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Definitions:

Remaining Useful Life

The estimated time period that an asset is expected to be functional and economically viable.

Gain on Disposal

The financial profit made from selling or disposing of a fixed asset for more than its book value.

Accumulated Depreciation

The total depreciation expense charged for an asset since it was put into use, reflecting its loss of value over time.

Replacement Cost

The current cost of replacing an asset with a similar new asset, reflecting the current market conditions and prices.