Consider a stock priced at 30 with a standard deviation of, Ask an Expert

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Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European.

What is the profit from the transaction from a finance perspective (adjusting for the TVM)?

$7.00

$4.11

$4.04

$3.96

none of the above

Assume that the stock begins paying a dividend of 3% and the price of the call option falls to $2.75. What is the price of the put in this situation?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92855873

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