Consider a One-Year Maturity Call Option and a One-Year Put

question 63

Multiple Choice

Consider a one-year maturity call option and a one-year put option on the same stock,both with striking price $100.If the risk-free rate is 5%,the stock price is $103,and the put sells for $7.50,what should be the price of the call?

• A)$17.50
• B)$15.26
• C)$10.36
• D)$12.26
• E)none of the above.

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Definitions:

GDP Deflator

An indicator of the price level for all newly produced, domestic, final goods and services within an economy.

CPI

It calculates the mean fluctuation in prices for a variety of consumer items and services that urban dwellers purchase, known as the Consumer Price Index.

Price of Oil

The cost per barrel of crude oil as determined by global markets, influenced by factors like supply, demand, geopolitical events, and market speculation.

CPI

The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.