Question
You can buy calls and/or put options on a stock with a current price of $61.00. The striking price for either option is $51.00. A
You can buy calls and/or put options on a stock with a current price of $61.00. The striking price for either option is $51.00. A put option with that striking price has a current value of $5.80. The prevailing risk-free rate is 8.00%. What must be the current value of a call option on the stock? Both options (calls and puts) written on the same stock and both with 1 year until expiration. In your calculations, use simple discounting instead of continuous discounting. Also, do not enter the dollar sign and use two decimals (round off to 2 decimals).
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