A Put Option Has a Price of $1 $0$

question 1

Multiple Choice

A put option has a price of $1.50,with exercise price of $14.00 and underlying asset price of $12.00.If the time to maturity is 30 days and the risk-free return is 7% p.a. ,what is the pricing bounds error?

• A) \( 0\)
• B) \( 0.42 \)
• C) \( 1.67 \)
• D) \( 2.50 \)

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Definitions:

Pearson Correlation

Another name for Pearson r, indicating the degree of linear relationship between two variables.

Null Hypothesis

A statement or hypothesis that suggests there is no statistical significance between the specified sets of observations.

Sample Size

The number of observations or replicates included in a statistical sample.

P Value

The probability of obtaining test results at least as extreme as the results observed, assuming the null hypothesis is true.