340. Two-State Option Pricing Model Rob wishes to buy a European put option on BioLabs Inc., a nondividend paying common stock, with a strike price of $50 and six months until expiration. BioLabs common stock is currently selling for $34 per share, and Rob expects that the stock price will either rise to $68 or fall to $19 in six months. Rob can borrow and lend at the risk-free EAR of 4 percent.

a) What should the put option sell for today?

b) What is the delta of the put?

c) How much would Rob have to lend to create a synthetic put?

d) How much does the synthetic put option cost? Is this greater than, less than, or equal to what the actual put option costs?