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You own 100 shares of GME corp, which is currently trading at $40 per share. A $40 strike price put on GME, expriring in 1-month
You own 100 shares of GME corp, which is currently trading at $40 per share. A $40 strike price put on GME, expriring in 1-month costs $2.30. The Federal Reserve is expected to raise the fed funds rate (risk-free rate) from 2.5% to 3% tomorrow. If all else stays equal (GME's stock price doesn't change, vol. doesn't change, etc.) the price of $40 stike put tomorrow will be _______. NOTE: Ignore the effect of time on option's prices in answering this question.
A. greater than $2.30.
B. less than $2.30.
C. exactly $2.30.
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