To Compute the Value of a Put Using the Black-Scholes

question 58

Multiple Choice

To compute the value of a put using the Black-Scholes option pricing model,you:

• A)first have to apply the put-call parity relationship.
• B)first have to compute the value of the put as if it is a call.
• C)compute the value of an equivalent call and then subtract that value from one.
• D)compute the value of an equivalent call and then subtract that value from the market price of the stock.
• E)compute the value of an equivalent call and then multiply that value by e^-RT.

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Definitions:

Nullify

To make something legally void or ineffective, canceling its legal force.

Best Interest

A standard that guides decisions meant to favor the well-being or advantage of an individual or entity, often used in legal and financial contexts.

Agent's Duty

The responsibilities and obligations an agent owes to their principal, including acting with care, loyalty, and in good faith.

Loyalty

The duty of an agent or employee to act in the best interests of their principal or employer, avoiding any conflicts of interest.