hard · Principles of Finance
A stock is currently trading at $50. A 6-month European call option with a strike of $45 is priced at $7.50.
If the continuously compounded risk-free rate is 4% and no dividends are expected, what is the theoretical price of the 6-month European put option with a strike of $45?
- $0.89
- $2.50
- $1.61
- $3.39
Sign up free to see the explanation and track your rank →
More Principles of Finance practice
- Which loan has the higher effective annual rate (EAR)?
- Using the Capital Asset Pricing Model (CAPM), calculate the cost of equity for a firm with
- What is its current market price?
- What is the Multiple of Invested Capital (MOIC) for the equity investors?
- What is its Modified Duration?
- What is the Cash Flow from Operations (CFO)?
- What is the net profit per share for the investor?
- What is its Degree of Financial Leverage (DFL)?