Question
Kumon Co.stock price is expected to go up by 20% or down by 15% over the next year. You own a one-year put option on
Kumon Co.stock price is expected to go up by 20% or down by 15% over the next year. You own a one-year put option on the stock.The interest rate is 12%, and current stock price of Kumon is $75. What exercise price leaves you indifferent between holding the put and exercise it now?
A.$27.342
B.$49.508
C.$77.907
D.$14.452
E.$88.437
F.$121.332
G.$34.521
H.$62.349
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Introduction to Finance Markets Investments and Financial Management
Authors: Melicher Ronald, Norton Edgar
15th edition
9781118800720, 1118492676, 1118800729, 978-1118492673
