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 (Click to select)decreasesincreases.