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

question 56

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 options.

---

Definitions:

Protestant Church

A Christian church that broke away from the Catholic Church in the 16th century, following the Reformation movements led by figures such as Martin Luther and John Calvin.

Liberty Of Contract

The principle that individuals have the freedom to negotiate the terms of their contracts without excessive government interference.

Middle Border

Refers to the central states of the United States during the 19th century, often considered the region between the Mississippi River and the Rocky Mountains.

Cash Crop

A type of crop grown primarily for sale to others rather than for personal or local consumption, often for profit.