A call option has a premium of $0.60,a strike price of $40,and 3 months to expiration.The current stock price is $39.60.The stock will pay a $0.80 dividend two months from now.The risk-free rate is 3 percent.What is the premium on a 3-month put with a strike price of $40? Assume the options are European style.
A) $0.25
B) $0.51
C) $0.78
D) $1.23
E) $1.50
Correct Answer:
Verified
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