The following quotes were observed for options on a given stock on November 1 of a given year. These are American calls except where indicated. Use the information to answer questions 7 through 20.
The stock price was 113.25. The risk-free rates were 7.30 percent (November) , 7.50 percent (December) and 7.62 percent (January) . The times to expiration were 0.0384 (November) , 0.1342 (December) , and 0.211 (January) . Assume no dividends unless indicated.
-What is the intrinsic value of the November 105 put?
Definitions:
Spontaneous Recovery
The reappearance of a previously extinguished response after a period of no exposure to the conditioned stimulus.
Respondent Behavior
Behavior that occurs as a direct response to a specific stimulus, often reflexive or involuntary in nature.
Classical Conditioning
A learning process in which a biologically potent stimulus is paired with a previously neutral stimulus to elicit a conditioned response.
Negative Reinforcement
A behavioral principle where the removal or avoidance of an unpleasant stimulus increases the likelihood of a behavior being repeated.
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