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Suppose that a stock will pay a dividend of $2 in 4 months. A call option on the stock has a strike price of $33 and will expire in 6 months. Four months from now, the stock price is expected to be $35 and the price of the call will be $3 after the dividend is paid. The annual continuously compounded risk-free interest rate r is 0.03. If the call option is unexercised, what will be the value 4 months from now of a put option on the stock with a strike price of $33 and time to expiration of 6 months?

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Financial Management, Finance

Category:- Financial Management
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