Bank of America (BAC) is currently trading for $15 per share. The stock pays no dividends. A one-year European call option on BAC with a strike price of $16 is currently trading for $1.25. If the risk-free interest rate is 2% per year, then the price of a one-year European put option on BAC with a strike price of $16 will be closest to: $1.94 $1.25 $0.98 $2.25

Bank of America (BAC) is currently trading for $15 per share. The stock pays no dividends. A one-year European call option on BAC with a strike price of $16 is currently trading for $1.25. If the risk-free interest rate is 2% per year, then the price of a one-year European put option on BAC with a strike price of $16 will be closest to: $1.94 $1.25 $0.98 $2.25

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 5ST

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