A stock is selling for $32.70. The strike price on a put, maturing in one year, is $35. The possible stock prices in one year are $39.50 and $28.40. If interest rates are 6.0%, the stock's dividend yield is 1.0%, what is the option price by the Binomial Model? O $1.92 O $2.28 O $2.87 $4.20

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter5: Financial Options
Section: Chapter Questions
Problem 4P: Put–Call Parity The current price of a stock is $33, and the annual risk-free rate is 6%. A call...
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A stock is selling for $32.70. The strike price on a put, maturing in one year, is $35. The possible
stock prices in one year are $39.50 and $28.40. If interest rates are 6.0%, the stock's dividend yield
is 1.0%, what is the option price by the Binomial Model?
O $1.92
O $2.28
O$2.87
O $4.20
Transcribed Image Text:A stock is selling for $32.70. The strike price on a put, maturing in one year, is $35. The possible stock prices in one year are $39.50 and $28.40. If interest rates are 6.0%, the stock's dividend yield is 1.0%, what is the option price by the Binomial Model? O $1.92 O $2.28 O$2.87 O $4.20
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