Reference no: EM133012524

Question 1 - What is the price of a European call option if the price of the equivalent put option is $6.00 and the share price, exercise price, and risk-free rate are $7.00, $6.50, and 1% per month (compounded), respectively, given the option has three months to expiry?

a) $2.75

b) $6.69

c) $3.57

d) $3.64

e) None of the above answers is correct.

Question 2 - What is the price of a European put option if the price of the equivalent call option is $4.00 and the share price, exercise price and risk-free rate are $5.00, $5.50, and 1% per month (compounded), respectively, given the option has three months to expiry?

a) $2.75

b) $2.40

c) $4.34

d) $3.64

e) None of the above answers is correct.