Question

The one-year risk-free interest rate is 3.4%. You read in Bloomberg that a call option and...

The one-year risk-free interest rate is 3.4%. You read in Bloomberg that a call option and a put option on a gold bar are worth $76 and $125 respectively, with an exercise price or strike of both options equal to $7870 and expiring in one year. What can you say about the current price of the gold bar?

Select one:

a.
$7409.94

b.
Nothing, as it is the spot price of gold that determines the value of the options and not the other way around.

c.
$7311.94

d. $7562.22

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