The following prices are available for call and put options on a stock priced at $50.The risk-free rate is 6 percent and the volatility is 0.35.The March options have 90 days remaining and the June options have 180 days remaining.The Black-Scholes model was used to obtain the prices.
Use this information to answer questions 1 through 20.Assume that each transaction consists of one contract (for 100 shares)unless otherwise indicated.
Answer questions 18 through 20 about a long box spread using the June 50 and 55 options.
-What is the cost of the box spread?
A)$500
B)$2,018
C)$76
D)$484
E)none of the above

Question

The following prices are available for call and put options on a stock priced at $50.The risk-free rate is 6 percent and the volatility is 0.35.The March options have 90 days remaining and the June options have 180 days remaining.The Black-Scholes model was used to obtain the prices.
  Use this information to answer questions 1 through 20.Assume that each transaction consists of one contract (for 100 shares)unless otherwise indicated.
Answer questions 18 through 20 about a long box spread using the June 50 and 55 options.
-What is the cost of the box spread?
A)$500 
B)$2,018 
C)$76 
D)$484 
E)none of the above

Quizplus · Accepted Answer

The Answer is D

The Following Prices Are Available for Call and Put Options