A Stock Currently Trades for $63

question 37

Multiple Choice

A stock currently trades for $63. Call options with a strike price of $62 sell for $4.00 and expire in six months. If the risk-free rate is 4 percent, what should the price of a put option with an exercise price of $62 be worth?

• A) $0.62
• B) $0.98
• C) $1.80
• D) $3.00
• E) $5.80

---

Definitions:

Bargaining Zone

The range between one party’s minimum reservation point and the other party’s maximum.

Reservation Point

In negotiation, the least favorable point at which one will accept a deal, beyond which the negotiation will be aborted or continued efforts for a better deal pursued.

True Conflict Resolution

The genuine and effective resolving of disagreements or differences, aiming for a constructive outcome.

Temporary Settlements

Living arrangements intended to be short-term and not permanent, often associated with displaced communities or emergency situations.