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A call option on the stock has an exercise price of 75 and

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Suppose that the stock now sells at $80, and the price will go up by 5% or down by 5% at the end of first six month (t = ½).  Then, the price will either go up by 10% or down by 10% at the end of year (t = 1).  A call option on the stock has an exercise price of $75 and a time to expiration of one year. Also, assume 10% annual interest rate and no dividend payment for this year. Calculate the put price at t=0.

Reference no: EM13481368

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