What is the lower bound for the price of a 6 month American put option on a stock when the stock price is $15, the strike price is $20, the continuously compounded risk- free interest rate is 5% and a dividend of $1 is expected in 1 month and in 4 months? a. $5.00 O b. $6.49 O c. $6.65
What is the lower bound for the price of a 6 month American put option on a stock when the stock price is $15, the strike price is $20, the continuously compounded risk- free interest rate is 5% and a dividend of $1 is expected in 1 month and in 4 months? a. $5.00 O b. $6.49 O c. $6.65
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 5P
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