The ability to purchase either call option or put option

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Reference no: EM132045253

XYZ stock currently trades at a price of $41 a share. Investors also have the ability to purchase either a call option or a put option on XYZ stock. Both options both have an exercise price of $40, and they both expire one year from today. The options are both European options (they can only be exercised on the expiration date), and XYZ stock does not pay a dividend. If the risk-free interest rate is 3%, and the call option sells for a premium of $7, the (no-arbitrage) price of the put option is: $7 $6.81 $6 $5.42 $4.83

Reference no: EM132045253

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