Luther Industries Is Currently Trading for $27 Per Share

question 9

Multiple Choice

Luther Industries is currently trading for $27 per share.The stock pays no dividends.A one-year European put option on Luther with a strike price of $30 is currently trading for $2.60.If the risk-free interest rate is 6% per year,then the price of a one-year European call option on Luther with a strike price of $30 will be closest to:

• A)$1.30.
• B)$7.10.
• C)$2.60.
• D)$1.95.

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Definitions:

Fear of Snakes

An intense, irrational fear of snakes, also known as ophidiophobia.

Monkey

A primate belonging to the simian infraorder, characterized by its tail and, in many species, its ability to climb trees.

Phobias

Severe, unreasonable fear directed towards particular objects, activities, or situations resulting in evasion actions.

Panic Disorder

A psychiatric disorder characterized by sudden, repeated attacks of intense fear and discomfort that reaches a peak within minutes.