Price the associated put using put-call parity

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Reference no: EM131925463

1. Price a 6 month call option with a strike price of $40.00, assuming an annual standard deviation of 30% on returns, a risk-free rate of 5%, and a current stock price of $41.25. Price the associated put using put-call parity. Reprice both options after changing the risk-free rate to 6%.

2. Based on the information below, what is the expected rate of return and standard deviation (using EXCEL, and SHOW WORK please):

Common Stock B

Probability Return

0.2 25%

0.3 6%

0.3 14%

0.2 22%

Reference no: EM131925463

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