1000 points call option is 405 According to putcall parity i

10.00 points call option is $4.05. According to put-call parity, if the effective annual A put option on a stock with a current price of $45 has an exercise price of $47. The price of the corresponding c nsk-free rate of interest is 6% and there are four months unei expiration, what should be value of the put? O not round intermediate calculations. Round your answer to 2 decimal places) Value of the put References eBook & Resources Worksheet Learming Objoctive: 16-04 Computle the proper relationship between call and put prices

Solution

Put call parity

call price + strike price * e^(-r*t) = put price + stock price

put price = 4.05 + 47*e^(-.06*.33) - 45

= 4.05 + 46.07 - 45

= 5.12

Similarly for second question

stock price = 5 + 55 * e^(-.07*1) - 4.5

= $51.78