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in an efficient market, a one-year call option on stock S with K = $25 is traded at $7.06, the current stock price S0 =
in an efficient market, a one-year call option on stock S with K = $25 is traded at $7.06, the current stock price S0 = $28.5, the expected market return is 7.5% and the T-Bill yield is 4%. You are about to purchase a one-year put option on the same stock with K = $26, someone offered it to you at a price of $3.6. Should you buy it? Why or why not?
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