Question

The price of a European put option on a stock with a strike price of $30.00...

The price of a European put option on a stock with a strike price of $30.00 is $6.80. The stock price is $28.00, the continuously compounded risk-free rate (all maturities) is 4% and the time to maturity is one year. A dividend of $2.00 is expected in three months. What is the price of a one-year European call option on the stock with a strike price of $30.00?  

Select one:

a. $7.22

b. $4.00

c. $6.98

d. $4.74

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The price of a European call option on a non-dividend-paying stock with a strike price of...
The price of a European call option on a non-dividend-paying stock with a strike price of $50 is $6. The stock price is $51, the continuously compounded risk-free rate (all maturities) is 6% and the time to maturity is one year. What is the price of a one-year European put option on the stock with a strike price of $50? a)$9.91 b)$7.00 c)$6.00 d)$2.09
Suppose that a 6-month European call A option on a stock with a strike price of...
Suppose that a 6-month European call A option on a stock with a strike price of $75 costs $5 and is held until maturity, and 6-month European call B option on a stock with a strike price of $80 costs $3 and is held until maturity. The underlying stock price is $73 with a volatility of 15%. Risk-free interest rates (all maturities) are 10% per annum with continuous compounding. Use put-call parity to explain how would you construct a European...
Consider an option on a stock where the stock price is $30, the strike price is...
Consider an option on a stock where the stock price is $30, the strike price is $29, the continuously compounded risk-free rate of return is 5% per year, the continuously compounded standard deviation of its return is 25% per year and the time to maturity is 4 months. If this stock is due to go ex-dividend in 1.5 months and paying a dividend of $0.50 then the Black-Scholes price of a European call on the stock is closest to what...
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a strike price of $20 and an expiration date in three months. Both sell for $3. The risk-free interest rate is 10 % per aunum, the current stock price is $19 , and a $1 dividend is expected in one month. identify the arbitrage oppotunity to a trader.
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a strike price of $20 and an expiration date in three months. Both sell for $2. The risk-free interest rate is 5% per annum, the current stock price is $25, and a $1 dividend is expected in one month. Identify the arbitrage opportunity open to a trader.
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a strike price of $25 and an expiration date in four months. Both sell for $4. The risk-free interest rate is 6% per annum, the current stock price is $23, and a $1 dividend is expected in one month. Identify the arbitrage opportunity open to a trader.
A European put option is currently worth $3 and has a strike price of $17. In...
A European put option is currently worth $3 and has a strike price of $17. In four months, the put option will expire. The stock price is $19 and the continuously compounding annual risk-free rate of return is .09. What is a European call option with the same exercise price and expiry worth? Also, given that the price of the call option is $5, show how is there an opportunity for arbitrage.
A European call option on a stock with a strike price of $50 and expiring in...
A European call option on a stock with a strike price of $50 and expiring in six months is trading at $14. A European put option on the stock with the same strike price and expiration as the call option is trading at $2. The current stock price is $60 and a $1 dividend is expected in three months. Zero coupon risk-free bonds with face value of $100 and maturing after 3 months and 6 months are trading at $99...
A European call option on a stock with a strike price of $50 and expiring in...
A European call option on a stock with a strike price of $50 and expiring in six months is trading at $14. A European put option on the stock with the same strike price and expiration as the call option is trading at $2. The current stock price is $60 and a $1 dividend is expected in three months. Zero coupon risk-free bonds with face value of $100 and maturing after 3 months and 6 months are trading at $99...
Consider a European call option and a European put option on a non dividend-paying stock. The...
Consider a European call option and a European put option on a non dividend-paying stock. The price of the stock is $100 and the strike price of both the call and the put is $104, set to expire in 1 year. Given that the price of the European call option is $9.47 and the risk-free rate is 5%, what is the price of the European put option via put-call parity?  
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT