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PUT-CALL PARITY A put option written on the stock of Ellis Enterprises (EE) has an exercise price of $30 and 9 months remaining until expiration. The risk-free rate is 5%. A call option written on EE has the same exercise price and expiration date as the put option. EE’s stock price is $45. If the call option has a price of $18.99, what is the price (i.e., value) of the put option?

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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250
BuyFind

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250

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Chapter
Section
Chapter 18.A, Problem 1P
Textbook Problem

PUT-CALL PARITY A put option written on the stock of Ellis Enterprises (EE) has an exercise price of $30 and 9 months remaining until expiration. The risk-free rate is 5%. A call option written on EE has the same exercise price and expiration date as the put option. EE’s stock price is $45. If the call option has a price of $18.99, what is the price (i.e., value) of the put option?

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