EBK INVESTMENTS
EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 20, Problem 7PS

a.

Summary Introduction

To calculate: The Price of 3 month put option on P.U.T.T stock at an exercise price of $100 if the risk interest rate is 10% p.a.

Introduction:

Put-call parity: The put-call parity equation is used to calculate the put price. This equation says that the call option and exercise price is equal to the stock value and put option.

b.

Summary Introduction

To explain: Simple strategy of option for the future movement of stock prices and how far it will move to make a profit on initial investment.

Introduction: The social and economics factor affects the stock prices. Put-call parity is used to determine the value of the call option.

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