Find the Value of a European Put Option on Futures

question 30

Multiple Choice

Find the value of a European put option on futures if the futures price is 72,the exercise price is 70,the continuously compounded risk-free rate is 8.5 percent,the volatility is .38 and the time to expiration is three months.

• A)6.30
• B)12.90
• C)4.34
• D)2.00
• E)none of the above

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Definitions:

Underreward Inequity

A situation where an individual perceives they are receiving less compensation or recognition for their efforts compared to others.

Outcome/Input Ratio

A concept used in equity theory referring to the ratio of contributions (inputs) an individual gives to a job and what they receive (outcomes) in return.

Overreward Inequity

A perception that one is receiving more rewards in comparison to their input or efforts, which can lead to feelings of guilt or discomfort.

Maslow's Needs Hierarchy

A theory proposed by Abraham Maslow that suggests human needs are arranged in a hierarchy from most to least pressing: physiological, safety, love/belonging, esteem, and self-actualization.