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Category > Accounting Posted 19 May 2017 My Price 4.00

A put option on a stock with a current price of $49 has an exercise price

 

A put option on a stock with a current price of $49 has an exercise price of $51. The price of the corresponding call option is $4.65. According to put-call parity, if the effective annual risk-free rate of interest is 4% and there are three months until expiration, what should be the value of the put? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of the put -----
 
 

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Alpha Geek
(8)
Status NEW Posted 19 May 2017 02:05 PM My Price 4.00

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file 1495206102-Answer.docx preview (115 words )
A----------- pu-----------t o-----------pti-----------on -----------on -----------a s-----------toc-----------k w-----------ith----------- a -----------cur-----------ren-----------t p-----------ric-----------e o-----------f $-----------49 -----------has----------- an----------- ex-----------erc-----------ise----------- pr-----------ice----------- of----------- $5-----------1. -----------The----------- pr-----------ice----------- of----------- th-----------e c-----------orr-----------esp-----------ond-----------ing----------- ca-----------ll -----------opt-----------ion----------- is----------- $4-----------.65-----------. A-----------cco-----------rdi-----------ng -----------to -----------put------------ca-----------ll -----------par-----------ity-----------, i-----------f t-----------he -----------eff-----------ect-----------ive----------- an-----------nua-----------l r-----------isk------------fr-----------ee -----------rat-----------e o-----------f i-----------nte-----------res-----------t i-----------s 4-----------% a-----------nd -----------the-----------re -----------are----------- th-----------ree----------- mo-----------nth-----------s u-----------nti-----------l e-----------xpi-----------rat-----------ion-----------, w-----------hat----------- sh-----------oul-----------d b-----------e t-----------he -----------val-----------ue -----------of -----------the----------- pu-----------t? -----------(Do----------- no-----------t r-----------oun-----------d i-----------nte-----------rme-----------dia-----------te -----------cal-----------cul-----------ati-----------ons-----------. R-----------oun-----------d y-----------our----------- an-----------swe-----------r t-----------o 2----------- de-----------cim-----------al -----------pla-----------ces-----------.) -----------Val-----------ue -----------of -----------the----------- pu-----------t --------------------------- -----------May----------- 18----------- 20-----------17 -----------09:-----------39 -----------AM
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