What Is the Put Option Premium Given the Following Information

question 11

Multiple Choice

What is the put option premium given the following information?

• A)$7.49
• B)$7.98
• C)$8.28
• D)$8.76
• E)$9.64

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Definitions:

Coupon Rate

The coupon rate is the annual interest rate paid by bond issuers on the bond's face value.

Clean Price

The price of a bond net of accrued interest; this is the price that is typically quoted.

Coupon Bond

A type of bond that pays the holder periodic interest payments based on a predetermined rate (the "coupon rate") until it matures, at which point the principal (or face value) is repaid.

Yield To Maturity

The total expected return on a bond if held to its maturity date, including both interest payments and any gain or loss if the bond was purchased at a discount or premium.