European put on Microsoft shares with an exercise price of $50 and maturity of 3 months is trading at $10. The 3-month interest rate, not annualized, is 0.4%. What is the price of Microsoft stock that makes the put break-even?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
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A European put on Microsoft shares with an exercise price of $50 and maturity of 3 months is trading at $10. The 3-month interest rate, not annualized, is 0.4%. What is the price of Microsoft stock that makes the put break-even?

 

 

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