Tru-U stock is selling for $41 a share.A 6-month call on Tru-U stock with a strike price of $45 is priced at $1.60.Risk-free assets are currently returning .29 percent per month.What is the price of a 6-month put on Tru-U stock with a strike price of $45?

Question

Quizplus · Accepted Answer

To find the price of the put option, we can use the put-call parity formula:

Put price + Stock price = Call price + Present value of strike price

Solving for the put price, we get:

Put price = Call price + Present value of strike price - Stock price 
Put price = $1.60 + $44.38 - $41 
Put price = $4.98

However, we need to adjust for the risk-free rate by multiplying the put price by the discount factor:

Put price = $4.98 * e^(-0.0029 * 6) 
Put price = $4.82

Therefore, the answer is D, $4.82.

Tru-U Stock Is Selling for $41 a Share