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Suppose Kate Nine stock is selling for $41 per share. Puts and calls with an exercise price of $40 are available on Kate Nine. The
Suppose Kate Nine stock is selling for $41 per share. Puts and calls with an exercise price of $40 are available on Kate Nine. The risk risk-free rate is 8%. The time to maturity of the puts and calls is 6 months (i.e., t = .50). The volatility of Kate Nines stock returns is 30% (i.e., = .30). Use the Black-Scholes equation to determine the price of the put.
Answer choices:
$4.79
$2.57
$2.22
$4.38
$3.29
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