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The Current Price of a Stock Is $50 and the Annual

Question 8

Multiple Choice

The current price of a stock is $50 and the annual risk-free rate is 6 percent. A call option with an exercise price of $55 and one year until expiration has a current value of $7.20. What is the value of a put option (to the nearest dollar) written on the stock with the same exercise price and expiration date as the call option?


A) $5.00.
B) $6.00.
C) $7.00.
D) $8.00.
E) $9.00.

Correct Answer:

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