A Call Option with 1 Month to Expiration Currently Sells

question 87

Multiple Choice

A call option with 1 month to expiration currently sells for $0.70.A put option with the same expiration sells for $1.10.The options are European style.The risk-free rate is 3 percent and the strike price of both options is $18.00.What is the current stock price?

• A) $16.87
• B) $17.06
• C) $17.29
• D) $17.56
• E) $17.86

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Definitions:

Sunshine

The direct light emitted by the sun, often considered in various contexts such as weather, solar energy, and environmental studies.

Melanoma

A type of skin cancer developing from the melanocytes, the cells that produce melanin, which gives skin its color.

Slope

In linear regression, it quantifies the change in the dependent variable for a one-unit change in an independent variable.

Regression Line

A straight line that best fits the data in a scatter plot, showing the direction and strength of a relationship between variables.