Option valuation: Consider a put option with a strike price of $40, which expires in one year. The risk-free rate of interest is 8 percent. The current underlying stock price is $20. Without arbitrage, which of the following is a possible price for the put option?
A) $0.50
B) $16.50
C) $25.00
D) None of the above
Correct Answer:
Verified
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