What Is the Put Option Premium Given the Following Information

question 41

Multiple Choice

What is the put option premium given the following information?

• A) $1.58
• B) $2.01
• C) $2.59
• D) $3.63
• E) $4.00

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Definitions:

Demands for Payment

Requests or invoices issued by creditors or suppliers for the settlement of outstanding debts.

Miller-Orr Model

A financial model used to manage cash flows and determine the optimal cash balance levels for a company, focusing on cost minimization.

Lower Limit

The minimum value in a range of acceptable or possible values, often used in statistics and quality control.

Target Cash Balance

The ideal amount of cash that a company aims to maintain in order to manage daily financial operations and contingencies effectively.