Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Textbook Question
Chapter 5, Problem 4P
Put–Call Parity
The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with a strike price of $32 and with 1 year until expiration has a current value of $6.56. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option?
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Students have asked these similar questions
Suppose that a call option with a strike price of $48 expires in one year and has a current market price of $5.17. The market price of the
underlying stock is $46.25, and the risk-free rate is 1%. Use put-call parity to calculate the price of a put option on the same underlying stock
with a strike of $48 and an expiration of one year.
The price of a put option on the same underlying stock with a strike of $48 and an expiration of one year is $. (Round to the nearest cent.)
The current price of a stock is $33, and the annual risk-free rate is 6%. Acall option with a strike price of $32 and with 1 year until expiration has acurrent value of $6.56. What is the value of a put option written on the stockwith the same exercise price and expiration date as the call option?
Put-Call Parity
The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with a strike price of $31 and with 1 year
until expiration has a current value of $5.58. 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.
$
Chapter 5 Solutions
Intermediate Financial Management
Ch. 5 - Define each of the following terms:
Option; call...Ch. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 1PCh. 5 - The exercise price on one of Flanagan Companys...Ch. 5 - Black-Scholes Model
Assume that you have been...Ch. 5 - Put–Call Parity
The current price of a stock is...Ch. 5 - Prob. 5PCh. 5 - Binomial Model The current price of a stock is 20....Ch. 5 - Prob. 7P
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- What is the value of a call option if the underlying stock price is $82, the strike price is $90, the underlying stock volatility is 51 percent, and the risk-free rate is 3 percent? Assume the option has 62 days to expiration. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a call optionarrow_forwardGive typing answer with explanation and conclusion to all parts A call option on a non-dividend-paying stock has a market price of +212. The stock price is $15, the exercise price is $13, the time to maturity is 3 months, and the risk-free interest rate is 5% per annum. What is the implied volatility? Please do all work?arrow_forwardWhat is the value of a put option if the underlying stock price is $44, the strike price is $37, the underlying stock volatility is 49 percent, and the risk-free rate is 5.6 percent? Assume the option has 137 days to expiration. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a put optionarrow_forward
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