A One Year Call Option Has a Strike Price of 70,expires

question 88

Multiple Choice

A one year call option has a strike price of 70,expires in 3 months,and has a price of $7.34.If the risk free rate is 6%,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:

Production Possibilities

A curve or frontier that shows various combinations of the amounts of two goods or services that can be produced within the limits of available resources and technology.

Specialization

The process or strategy of focusing on a narrow area of expertise or production to gain efficiency or quality in the output.

Production Possibilities Curve

A graphical representation of the maximum goods and services that a society can produce, given its productive resources and technology.

Immigration

Choosing to live indefinitely in a country that is not your country of origin.