USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 118

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
A stock currently trades for $130 per share. Options on the stock are available with a strike price of $125. The options expire in 10 days. The risk-free rate is 3 three over this time period, and the expected volatility is 0.35.
-Refer to Exhibit 16.3. Calculate the price of the put option.

• A) $1.086
• B) $0.862
• C) $6.234
• D) $0.623
• E) $2.317

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Definitions:

Upper Arm

The region of the human arm between the shoulder and the elbow, containing muscles like the biceps and triceps which are responsible for bending and stretching the arm.

Fetus

A developing mammal or human from the stage of implantation or gestation until birth.

Gestation

The period of development from the fertilization of the egg to the birth of an animal or human.

Hear

The physiological process involving the ears that allows perception of sounds.