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please solve question 7 it's a 3 part question and I'm stuck on question 7 Q5: Use the following information to answer the next three

please solve question 7 it's a 3 part question and I'm stuck on question 7

Q5: Use the following information to answer the next three questions. The common stock of Williams Inc. has been trading in a narrow price range for the past few months, but you are convinced it will break out of its narrow range over the next 6 months. The current price of the stock is $25 per share, and the price of a 6-month call option with an exercise price of $30 is $1.15. You expect the stock to pay a $4 dividend over the course of the next 6 months. If the risk-free interest rate is 3% per year, what must be the price of a 6-month put option on Williams stock at an exercise price of $30?

A. 9.65 (correct answer)

B.5.43

C.7.35

D.5.71

Q6: Suppose that put-call parity holds and you decide to create a straddle position using options on Williams stock. What is the total upfront cost of your position? (Do not enter a dollar sign when inputting your answer)

10.8 (answer)

Q7: Assuming put-call parity holds, what is your profit/loss from your straddle position if Williams stock sells for $31 when the options expire?

A.-980

B. 980

C.950

D. -950

Q3: The value of a put option is positively related to the risk free rate. True or False

Q11: The value of a call option is positively related to changes in the price of the underlying asset. True or False

image text in transcribed
Use the following information to answer the next three questions The common stock of Williams Inc has been trading in a narrow price range for the past few months, but you are convinced it will break out of its narrow range over the next 6 months. The current price of the stock is $25 per share, and the price of a 6-month call option with an exercise price of $30 is $1.15 You expect the stock to pay a $4 dividend over the course of the next 6 months. If the risk-free interest rate is 3% per year, what must be the price of a 6 month put option on Williams stock at an exercise price of $30? 9.65 O 5.43 O 735 O 5.71 QUESTION 6 Suppose that put call panty holds and you decide to create a straddle position using options on Williams stock What is the total upfront cost of your position? (Do not enter a dollar sign when inputting your answer) 10.8 QUESTION 7 Assuming put call party holds, what is your profit/loss from your straddio position if Williams stock sells for $31 when the options expiro? 980 000 050 950

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