Question
The price of a non-dividend paying stock is $25 and the price of a five-month European call option on the stock with a strike price
The price of a non-dividend paying stock is $25 and the price of a five-month European call option on the stock with a strike price of $27 is $1.5. The risk-free rate is 6.5% per annum with continuous compounding. What is the lowest bound price of a five-month European put option with a strike price of $27?
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk
11th Edition
0324422865, 978-0324422863
