(Pricing a call and put) A stock traded for $25 today will, in 1 year, be worth...

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(Pricing a call and put) A stock traded for $25 today will, in 1 year, be worth either $35 or $20. If the interest rate is 3%:

a. What is the value today of a 1-year European call option on the stock with exercise price $30?

b. Calculate the value today of a 1-year European put option on the stock with exercise price $30.

c. Show that put–call parity holds: That is parts a and

b, show the following:

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Principles Of Finance Wtih Excel

ISBN: 9780190296384

3rd Edition

Authors: Simon Benninga, Tal Mofkadi

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Question Posted: Jun 10, 2024 02:01 AM

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(Pricing a call and put) A stock traded for $25 today will, in 1 year, be worth...

Question:

X Call price+ Stock price today + Put price 1+r

Step by Step Answer:

Principles Of Finance Wtih Excel

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