Consider an European put option. Suppose Exercise price=$60. Expiration date=50 (and we assume 360 days of conversion). If risk-free rate is 5%, and the underlying stock price is $100, what is the lower boundary for this European put option?

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter5: Currency Derivatives
Section: Chapter Questions
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Consider an European put option. Suppose Exercise price=$60. Expiration date=50 (and we assume 360 days of conversion). If risk-free rate is 5%, and the underlying stock
price is $100, what is the lower boundary for this European put option?
Transcribed Image Text:Consider an European put option. Suppose Exercise price=$60. Expiration date=50 (and we assume 360 days of conversion). If risk-free rate is 5%, and the underlying stock price is $100, what is the lower boundary for this European put option?
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