The Price of a European Put Option on Potash Corp

question 71

Multiple Choice

The price of a European put option on Potash Corp stock with an exercise price of $48 and one year to expiry is trading at $4.15.The current price of the stock is $45,and the risk-free rate is 3%.With no arbitrage,what must be the price of a European call on Potash Corp with an exercise price of $48?

• A)$2.55
• B)$5.75
• C)$3.00
• D)$2.91
• E)$0.16

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Definitions:

Data Acquisition

The process of sampling signals that measure real-world physical conditions and converting the resulting samples into digital numeric values for processing by a computer.

Experimental Data

Data obtained through manipulation and controlled testing in an experiment, designed to discover causal relationships between variables.

Observational Data

Information collected through observing subjects in their natural environment without manipulating the study environment.

Direct Observation

A method of collecting data by watching subjects in their natural environment without manipulation or interference.