1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
liubo4ka [24]
3 years ago
15

The current price of a stock is $50, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells

for $7.20. What is the value of a put option, assuming the same strike price and expiration date as for the call option? Select one: a. $7.33 b. $7.71 c. $8.12 d. $8.55 e. $9.00
Business
1 answer:
Vlad [161]3 years ago
6 0

Answer:

The value of the put option is;

e. $9.00

Explanation:

To determine the value of the put option can be expressed as;

C(t)-P(t)=S(t)-K.e^(-rt)

where;

C(t)=value of the call at time t

P(t)=value of the put at time t

S(t)=current price of the stock

K=strike price

r=annual risk free rate

t=duration of call option

In our case;

C(t)=$7.2

P(t)=unknown

S(t)=$50

K=$55

r=6%=6/100=0.06

t=1 year

replacing;

7.2-P=50-55×e^(-0.06×1)

7.2-P=50-(55×0.942)

7.2-P=50-51.797

P=51.797+7.2-50

P=$8.997 rounded off to 2 decimal places=$9.00

You might be interested in
Severe folate deficiency in adolescence can result in:
gregori [183]
It can result in many different symptoms including extreme fatigue, mouth sores, gray hair, tongue swelling, and growth problems.
3 0
3 years ago
Refrigerant ____ is to reprocess refrigerant to new product specifications as set by Environmental Protection Agency (E.P.A.).
Kobotan [32]

Answer:

Reclaiming

Explanation:

From the question we were told tha refrigerant "Reclaiming" is to reprocess refrigerant to new product specifications as set by Environmental Protection Agency (E.P.A.).

Reclaiming is the process of reforming, or to turn wastes refuse through industrial process or natural process into a useful products or substance.its a means in which usable material is been generated from. by products which is achieved through following the rules set by

Environmental Protection Agency (E.P.A.). for safety of all.

7 0
3 years ago
Which of the following is not a concept related to explaining abnormal excess stock returns?A. January effect B. neglected-firm
Anastaziya [24]

The preferred stock effect is not a notion that can be used to explain abnormally high excess stock returns.

<h3>What is the preferred stock?</h3>

The term "stock" refers to a company's ownership or equity. Common stock and preferred stock are the two forms of equity. Preferred investors are entitled to more dividends or asset distributions than common stockholders. The specifics of each preferred stock vary depending on the issuance.

When it comes to dividends, preferred stockholders have a preference over ordinary stockholders, which typically yield more than common shares and might be paid monthly or quarterly. These dividends can be fixed or determined by reference to a benchmark interest rate, such as the London Interbank Offered Rate.

To learn more about stock, click

brainly.com/question/28235296

7 0
1 year ago
What level of government is most closely associated with zoning?
balandron [24]
Local
Shhsbsn( I needed 20 chacters)
7 0
3 years ago
When Men's Wearhouse fired a salesperson who wasn't sharing walk-in customer traffic, and total clothing sales volume among all
Reika [66]

When Men's Wearhouse fired a salesperson who wasn't sharing walk-in customer traffic, and total clothing sales volume among all salespeople increased significantly, the company reduced destructive internal competition.

<h3>What is a destructive competition?</h3>
  • Multiple producers being driven out of the market by competition.
  • When there are numerous manufacturers of a good, prices are frequently driven down to the point that nobody makes a profit, which is when destructive competition takes place.

<h3>What do you mean by internal competition?</h3>
  • The aforementioned components are the foundation of our concept of internal competition, which is senior management-sanctioned duplication or overlap of activity within the firm's boundaries in an effort to resolve market or technology uncertainties.

<h3>Is competition is constructive or destructive?</h3>
  • However, competition can really be divided into two types: healthy competition and unhealthy competition.
  • Two competitors may work better together or may just cause mutual stress, similar to waves crashing into one another to create a larger wave.

Learn more about destructive internal competition here:

brainly.com/question/27911918

#SPJ4

3 0
2 years ago
Other questions:
  • Which of the following will not be a consequence of an import tariff?
    11·1 answer
  • Can someone please help me'/??? PLZZ
    11·1 answer
  • Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $8.4
    6·1 answer
  • Carla has been directed by her regional marketing manager to cut prices on seasonal items, place an ad in the local paper, and t
    9·1 answer
  • In advertising, puffery refers to ________. Group of answer choices broadcasting a straightforward promotional message including
    15·1 answer
  • Which of the following products would most likely be the hardest for a new salesperson to sell?
    7·1 answer
  • Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions:
    7·1 answer
  • Suppose that the administration in charge of the government proposes increasing spending on infrastructure. Assume that everythi
    15·1 answer
  • How does the us economy differ from pure capitalism.
    12·2 answers
  • Production possibilities curve. the curve of the graph<br><br> is called "The Frontier"
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!