Price of put option be to preclude profitable opportunities

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1. KD Industries stock is currently trading at $32 per share. Consider a put option on KD stock with a strike price of $30. The maximum value of this put option is ________.

A. $2

B. $0

C. $32

D. $30

2. Suppose you are looking to exploit opportunities in the options markets. The price of a call option on Apple computers with a maturity of one year and strike price $150 is $15, and the price of the stock is $140. What should the price of a put option be to preclude profitable opportunities? The risk-free rate of interest is 5%.

A. $19.63

B. $21.45

C. $25.00

D. $17.86

Reference no: EM131346873

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