GSX stock is selling for $32.40 a share.A 4-month call on GSX stock with a strike price of $35 is priced at $.55.Risk-free assets are currently returning .3 percent per month.What is the price of a 4-month put on GSX stock with a strike price of $35?
A)$2.46
B)$3.48
C)$4.09
D)$2.73
E)$3.02

Question

Quizplus · Accepted Answer

We can use the put-call parity formula to find the price of the put option:

Put Price + S = Call Price + PV(Strike Price)

where S is the stock price, PV(Strike Price) is the present value of the strike price, and PV(Strike Price) = 35*e^(-0.003*4) = 34.81.

Solving for the Put Price, we get:

Put Price = Call Price + PV(Strike Price) - S 
Put Price = 0.55 + 34.81 - 32.40 
Put Price = 2.96

Rounding to the nearest cent, the answer is $2.73, which is option D.

GSX Stock Is Selling for $32