A stock is currently selling for $20.65. A 3-month call option with a strike price of $20 has an option premium of $1.30. The risk-free rate is 2% and the market rate is 8%. What is the option premium on a 3-month put with a $20 strike price? Assume the options are European style.
A) $0
B) $.15
C) $.35
D) $.55
E) $.75
Correct Answer:
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