A European put option allows an investor to sell a share of stock at the exercise price on the exercise data.

For example, if the exercise price is $48, and the stock price is $45 on the exercise date, the investor can sell the stock for $48 and then immediately buy it back

(that is, cover his position) for $45, making $3 profit.

But if the stock price on the exercise date is greater than the exercise price, the option is worthless at that date. So for a put, the investor is hoping that the price of the stock decreases. Using the same parameters as in Example 12.8, find a fair price for a European put option. (Note: As discussed in the text, an actual put option is usually for 100 shares.)