1 (a). A put option with an exercise price of $17 that expires in 4 months...

1 (a). A put option with an exercise price of $17 that expires in 4 months currently costs $3. The
stock price is currently $18 and the risk-free rate of return is 0.04. What is a call option worth (same exercise price and expiry)?

(b) Draw the profit diagram (at expiry) for the put option from part (a)

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 year ago

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