A Put Option That Expires in Eight Months with an Exercise

question 56

Multiple Choice

A put option that expires in eight months with an exercise price of $57 sells for $3.85.The stock is currently priced at $59,and the risk-free rate is 3.1 percent per year,compounded continuously.What is the price of a call option with the same exercise price and expiration date?

• A)$6.67
• B)$7.02
• C)$7.34
• D)$7.71
• E)$7.80

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Definitions:

Power Distances

A cultural dimension that describes the extent to which less powerful members of organizations and institutions accept and expect power to be distributed unequally.

First Names

The names given to individuals at birth or adoption, used for personal identification and often placed before the family name.

People

Individuals or groups involved in or affected by the operations and activities of an organization.

Cultural Differences

Variations in the beliefs, values, habits, and practices of different societies, which can impact interactions and business operations.