Assume That the Stock of ABC, Inc

question 45

Multiple Choice

Assume that the stock of ABC, Inc., is currently trading for $21 and will either rise to $30 or fall to $18 in one year. Assume the risk-free rate for one year is 0 percent. You own a portfolio that consists of one call option and one put option. Both options have a strike price of $25, and both expire in one year. What is the value of your portfolio? (Do not round intermediate computations. Round final answer to one decimal place.)

• A) $4.5
• B) $25.0
• C) $6.0
• D) $6.5

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