D. decrease; decrease 31. You find the option prices for three June call options on the same stock. The 95 call has an implied volatility of 25%, the 100 call has an implied volatility of 25%, and the 105 call has an implied volatility of 30%. If you believe this represents a mispricing situation, you may want to A. buy the 105 call and write the 100 call B. buy the 105 call and write the 95 call C. buy either the 95 or the 100 call and write the 105 call D. write the 105 call and write either the 95 or the 100 call 32. You are considering purchasing a put option on a stock with a current price of $33. The exercise price is $35, and the price of the corresponding call option is $2.25. According to the put-call parity theorem, if the risk-free rate of interest is 4% and there are 90 days until expiration, the value of the put should be E. S2.25 F. $3.91 G.S4.05 H. 55.52 33. The stock price of Harper Corp. is $33 today. The risk-free rate of return is 6%, and Harper Corp. pays no dividends. A put option on Harper Corp. stock with an exercise price of $30 and an expiration date 73 days from now is worth $0.95 today. A call option on Harper Corp. stock with an exercise price of S30 and the same expiration date should be worth _today. A S2.25 B. $3.14 C. $3.99 D. $4.31 34. A call option on Juniper Corp. stock with an exercise price of $75 and an expiration date 1 year from now is worth $3 today. A put option on Juniper Corp. stock with an exercise price of $75 and an expiration date 1 year from now is worth $2.50 today. The risk- free rate of return is 8%, and Juniper Corp. pays no dividends. The stock should be worth E. $69.73 today F. $71.69 L. 39.99 D. $4.31 34. A call option on Juniper Corp. stock with an exercise price of $75 and an expiration date 1 year from now is worth S3 today. A put option on Juniper Corp. stock with an exercise price of $75 and an expiration date 1 year from now is worth $2.50 today. The risk- free rate of return is 8%, and Juniper Corp. pays no dividends. The stock should be worth E. $69.73 today F. $71.69 G. 573.12 H. S77.25 You would like to hold a protective put position on the stock of Avalon Corporation to lock in a guaranteed minimum value of $50 at year-end. Avalon currently sells for $50. Over the next year, the stock price will increase by 10% or decrease by 10%. The T-bill rate is 5%. Unfortunately, no put options are traded on Avalon Co. 35. (Avalon Corporation) Suppose the desired put options with X- 50 were traded. How much would it cost to purchase? E. $1.19 F.S2.38 G. S5 H. S3.33 36. (Avalon Corporation) What would have been the cost of a protective put portfolio? A $48,81 B. 551.19 C. $52.38 D. 553.38 37. (Avalon Corporation) What portfolio position in stock and T- bills will ensure you a payoff equal to the payoff that would be provided by a protective put with X-S50? A. % share of stock and S25 in bills B. I share of stock and S50 in bills C. share of stock and $26.19 in bills