A stock is selling for $32.70. The strike price on a put, maturing in one year, is $35. The possible stock prices in one year are $39.50 and $28.40. If interest rates are 6.0%, the stock's dividend yield is 1.0%, what is the option price by the Binomial Model? O $1.92 O $2.28 O $2.87 $4.20

A stock is selling for $32.70. The strike price on a put, maturing in one year, is $35. The possible stock prices in one year are $39.50 and $28.40. If interest rates are 6.0%, the stock's dividend yield is 1.0%, what is the option price by the Binomial Model? O $1.92 O $2.28 O $2.87 $4.20

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

A stock is selling for $32.70. The strike price on a put, maturing in one year, is $35. The possible
stock prices in one year are $39.50 and $28.40. If interest rates are 6.0%, the stock's dividend yield
is 1.0%, what is the option price by the Binomial Model?
O $1.92
O $2.28
O$2.87
O $4.20

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