of $1.32 is expected in 8 months. What is the price of a 1-year European put option on the stock with a strike price of $49.38?

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
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The price of a European call option on a stock with a
strike price of $49.38 is $6. The stock price is $52.43,
the continuously compounded risk-free rate (all
maturities) is 6% and the time to maturity is 1 year. A
dividend of $1.32 is expected in 8 months. What is the
price of a 1-year European put option on the stock with
a strike price of $49.38?
Transcribed Image Text:The price of a European call option on a stock with a strike price of $49.38 is $6. The stock price is $52.43, the continuously compounded risk-free rate (all maturities) is 6% and the time to maturity is 1 year. A dividend of $1.32 is expected in 8 months. What is the price of a 1-year European put option on the stock with a strike price of $49.38?
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