A put option written on the stock of Taylor Enterprises (TE) hasan exercise price of $25 and 6 months remaining until expiration.The risk-free rate is 6%. A call option written on TE has the sameexercise price and expiration date as the put option. TE’s stock priceis $35. If the call option has a price of $12.05, then what is the price(i.e., value) of the put option? ($1.31)
A put option written on the stock of Taylor Enterprises (TE) hasan exercise price of $25 and 6 months remaining until expiration.The risk-free rate is 6%. A call option written on TE has the sameexercise price and expiration date as the put option. TE’s stock priceis $35. If the call option has a price of $12.05, then what is the price(i.e., value) of the put option? ($1.31)
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
Problem 1PS
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A put option written on the stock of Taylor Enterprises (TE) has
an exercise price of $25 and 6 months remaining until expiration.
The risk-free rate is 6%. A call option written on TE has the same
exercise price and expiration date as the put option. TE’s stock price
is $35. If the call option has a price of $12.05, then what is the price
(i.e., value) of the put option? ($1.31)
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