Suppose You Are Looking to Exploit Opportunities in the Options

question 32

Multiple Choice

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

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

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Definitions:

Liabilities

Financial obligations a company owes to outside parties.

Assets

Resources owned by a business which are expected to provide future economic benefits, such as cash, inventory, property, and equipment.

Liabilities

Financial obligations or debts owed by a business to others, which must be settled over time through the transfer of economic benefits.

Assets

Resources owned or controlled by an entity that are expected to produce economic value.