In April 2017, Facebooks stock price was about $145. An eight-month call on the stock, with an

Question:

In April 2017, Facebook’s stock price was about $145. An eight-month call on the stock, with an exercise price of $145, sold for $10.18. The risk-free interest rate was 1% a year. How much would you be willing to pay for a put on Facebook stock with the same maturity and exercise price? Assume that the Facebook options are European options. Facebook does not pay a dividend.

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Principles of Corporate Finance

ISBN: 978-1260013900

13th edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen

Question Posted: