A One-Year Call Option Has a Strike Price of 70

question 97

Multiple Choice

A one-year call option has a strike price of 70, expires in three months, and has a price of $7.34. If the risk-free rate is 6 percent, and the current stock price is $62, what should the corresponding put be worth?

• A) $5.34
• B) $8.00
• C) $10.68
• D) $14.33
• E) $13.33

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Definitions:

Conclusion

The end or finish of an event, process, or text, often summarizing findings or results.

Power Curve

A graphical representation used in statistics to show the probability of rejecting the null hypothesis at various effect sizes.

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, indicating the test's ability to detect an effect when there is one.

Confidence Interval Estimate

A range of values derived from sample statistics that is likely to contain the value of an unknown population parameter, with a certain level of confidence.