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The common stock of the Pat plc. corporation has been trading in a narrow range around 145 per share for months, and you believe it
The common stock of the Pat plc. corporation has been trading in a narrow range around 145
per share for months, and you believe it is going to stay in that range for the next 12 months. The
price of a 12-month European put option with an exercise price of 145 is 8.19.
i) If the risk-free interest rate is 9% per year, what must be the price of a 12-month call option
on Pat plc. stock at an exercise price of 145 if it is at the money? (The stock pays no
dividends).
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