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need help with break-even exercise price Suppose a stock price can go up by 15% or down by 13% over the next year. You own
need help with break-even exercise price
Suppose a stock price can go up by 15% or down by 13% over the next year. You own a one-year put on the stock. The interest rate is 10%, and the current stock price is $60 a. What exercise price leaves you indifferent between holding the put or exercising it now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Break-even exercise price b. How does this break-even exercise price change if the interest rate is increased? If the interest rate is increased, the value of the put option decreasesEStep by Step Solution
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