Question
In: Finance
The current price of a stock is $35, and the annual risk-freerate is 4%. A...
The current price of a stock is $35, and the annual risk-free rate is 4%. A call option with a strike price of $31 and with 1 year until expiration has a current value of $6.24. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option? Do not round intermediate calculations. Round your answer to the nearest cent.
Solutions
Expert Solution
Value of the call + PV of the strike price = Spot price of the share + Value of the put
Given
Value of the call = 6.24
Spot price of the share = $35
So,
6.24+ 31*e-0.04 = 35+Value of the put
Value of the put = (6.24+31*e-0.04)-35
Value of the put = (6.24+31*0.9608)-35
= (6.24+29.7848)-35
= 36.0248 – 35
Value of the put = $1.0248
jeff jeffy answered 2 years agoRelated Solutions
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