Suppose You Are Looking to Exploit Opportunities in the Options

question 89

Multiple Choice

Suppose you are looking to exploit opportunities in the options markets. The price of a call option on Massive Industries with a maturity of one year and an exercise price of $150 is $15, and the share price is $140. What should the price of a put option be to preclude profitable opportunities? The risk-free rate of interest is 5%.

• A)$17.86
• B)$21.45
• C)$25.00
• D)$19.63

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Definitions:

Endosperm

The nutrient-rich tissue inside seeds that provides nourishment to the developing embryo in angiosperms.

Bandwidth

The maximum rate of data transfer across a given path or connection in a network, usually measured in bits per second (bps).

Transmission Medium

A material or substance that facilitates the transfer of energy or data between locations.

Bits Per Second

A unit of measurement for data transmission speed in digital networks, indicating the number of binary digits transmitted per second.