Assuming that pricing is by no-arbitrage model

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Cherie Coleman wishes to purchase a European call option with expiration in one year and strike price $6,840. The underlier is 100 shares of Eureka Energy stock. The stock’s current price is $67.90 per share, and the annual effective interest rate is 4.2%. The price of a European put option, with expiration in one year and strike price $6,840, is $32.17. How much should Cherie expect to pay for the desired option, assuming that pricing is by a no-arbitrage model?

Reference no: EM132024325

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