A Stock Is Valued at $25

question 58

Multiple Choice

A stock is valued at $25.75 a share. A European 6-month call option has a strike price of $25 and an option premium of $1.40. The market rate is 9.5 percent and the risk-free rate is 2.5 percent. What is the price of a European 6-month put option with a $25 strike price?

• A) $0.00
• B) $0.09
• C) $0.34
• D) $1.48
• E) $1.61

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Definitions:

Expenses

Costs incurred in the process of generating revenue, including operating costs, utilities, and salaries.

Recording Process

The systematic procedure of capturing and documenting financial transactions and events in the accounting records.

Journal Information

Pertains to the details recorded in a journal entry, which includes the date, accounts affected, and amounts debited or credited.

Ledger

A book or other collection of financial accounts of a particular type, where transactions are recorded.