Question
In each of the following questions, you are asked to compare two options with parameters as given. The risk-free interest rate for all cases should
In each of the following questions, you are asked to compare two options with parameters as given. The risk-free interest rate for all cases should be assumed to be 4%. Assume the stocks on which these options are written pay no dividends.
a.
| Put | T | X | SD | Price of Put |
| A | 0.5 | 50 | 0.20 | $10 |
| B | 0.5 | 50 | 0.25 | $10 |
Which put option is written on the stock with the lower price?
A.
B.
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Public Finance
Authors: Charles Francis Bastable
1st Edition
1375520083, 978-1375520089
