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Suppose that an American put option with a strike price of $155.5 and maturity of 12.0 months costs $11.0. The underlying stock price equals 143. The continuously compounded risk-free rate is 6.5 percent per year. What is the potential arbitrage profit from buying a put option on one share of stock? 12.401 1.5 O no arbitrage profit available O 11.943 O 1.6783

Suppose that an American put option with a strike price of $155.5 and maturity of 12.0 months costs $11.0. The underlying stock price equals 143. The continuously compounded risk-free rate is 6.5 percent per year. What is the potential arbitrage profit from buying a put option on one share of stock? 12.401 1.5 O no arbitrage profit available O 11.943 O 1.6783

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Suppose that an American put option with a strike price of $155.5 and maturity of 12.0 months costs $11.0. The underlying stock price equals 143. The continuously compounded risk-free rate is 6.5 percent per year. What is the potential arbitrage profit from buying a put option on one share of stock? O 12.401 1.5 no arbitrage profit available 11.943 1.6783
Transcribed Image Text:Suppose that an American put option with a strike price of $155.5 and maturity of 12.0 months costs $11.0. The underlying stock price equals 143. The continuously compounded risk-free rate is 6.5 percent per year. What is the potential arbitrage profit from buying a put option on one share of stock? O 12.401 1.5 no arbitrage profit available 11.943 1.6783
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