Suppose a Stock Is Currently Trading for $35,and in One

question 55

Multiple Choice

Suppose a stock is currently trading for $35,and in one period it will either increase to $38 or decrease to $33.If the one-period risk-free rate is 6%,what is the price of a European put option that expires in one period and has an exercise price of $36?

• A)$1.55
• B)$1.50
• C)$3.00
• D)$0.51
• E)$2.49

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