A Stock Is Currently Selling for $40

question 100

Multiple Choice

A stock is currently selling for $40.85.A 3-month call option with a strike price of $40 has an option premium of $1.30.The risk-free rate is 2 percent and the market rate is 9.5 percent.What is the option premium on a 3-month put with a $40 strike price? Assume the options are European style.

• A)$0.00
• B)$0.05
• C)$0.15
• D)$0.25
• E)$0.35

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Definitions:

Legitimate Competitive Behavior

Actions taken by businesses that are appropriate and lawful in a competitive market to gain advantage.

Transferred Intent

A legal principle under which a person who intends to harm one individual, but unintentionally harms a different individual, can be liable to the second victim for an intentional tort.

Intentional Physical Contact

Intentional physical contact involves deliberately touching or making contact with another individual, which can range from acts of kindness to assaultive behavior depending on the context.

Battery

The unprivileged, intentional touching of another.