A call option has a premium of $2.80,a strike price of $55,and 3 months to expiration.The current stock price is $52.20.The stock will pay a $1.25 dividend in one month.The risk-free rate is 2.5 percent.What is the premium on a 3-month put with a strike price of $55? Assume the options are European style.
A)$2.08
B)$2.15
C)$3.32
D)$4.12
E)$6.51

Question

Quizplus · Accepted Answer

Put option price = -$52.20 + $1.25/(1.025)^1/12 + $55/(1 + .025)^3/12 + $2.80 = $6.51

A Call Option Has a Premium of $2