Question

The current stock price is $129 and put price is $6. The risk-free interest rate is 10% per annum continuously compounded. Using the put-call parity, calculate the call price. The strike is $105 and the maturity is 0.5 year for both put and call.

Answer #1

**Answer:-**

**The formula for Put-call parity is given
by:-**

**Where, C is the call option price**

**P is the Put option price**

**S is the Stock price**

**K is the Strike price of put and call**

**r is the Risk-free interest rate**

**t is the time to expiration**

The following informations are given in the question:-

Stock price (S) = $ 129

Put price(P) = $ 6

Risk-free interest rate (r) = 10 %

Strike price (K) = $105

Time to maturity (t) = 0.5 year

**The call price can be determined using the above
formula:**

C = 135 - (105 / 1.0488)

**C = $
34.89**

**Hence, the Call price is $ 34.89**

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