A 6-Month Put Option on Smith Corp

question 34

Multiple Choice

A 6-month put option on Smith Corp.'s stock has a strike price of $45 and sells in the market for $8.90.Smith's current stock price is $41.What is the option premium?

• A)$4.41
• B)$4.90
• C)$5.39
• D)$5.93
• E)$6.52

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Definitions:

Probability Distribution

A mathematical description of a random phenomenon in terms of the probabilities of various possible outcomes.

Sample Size

The number of observations or data points collected in a sample from a population.

Standard Error

The standard deviation of the sampling distribution of a statistic, often used to measure the accuracy of an estimate.

Positively Skewed Distribution

A distribution where more values fall to the left side of the mean, causing a long tail on the right, indicating that the median is less than the mean.