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:

Proactive Interference

A phenomenon where older memories interfere with the recall of newer memories.

Reactive Interference

A phenomenon wherein newer information interferes with one's ability to recall older information.

Retroactive Interference

A memory disruption that occurs when newly learned information interferes with the recall of previously learned information.

Encoding Failure

The inability to form a memory due to insufficient attention to the details of an event or information at the time of encoding.