a) HighFlyer Stock currently sells for $48. A one-year call option with strike price of $55 sells for $9, and the risk-free interest rate is 6%. What is the price of a one-year put with strike price of $55?

Select one:

a. $9.00

b. $12.89

c. $16.00

d. $18.72

e. $15.60

b) Now assume you write a call option on HighFlyer for September, 2022 delivery with an exercise price of $55 and use the proceeds to buy a put option with exercise price of $45 with the same maturity as the call. What is the name of this type of option strategy and describe briefly how it works.

Answer rating: 100% (QA)

Answer a Call Option Price 9 Strike Price 55 Risk free rate 6 Time 1 Spot Pri... View the full answer