A stock is priced at $48.24 per share. The stock does not pay dividends. A European put option on the stock is priced at $1.74 per share. The put option expires in 2 months and has a strike price of $44 per share. Suppose the interest rate for continuous compounding is 2.48%.

To rule out arbitrage, what is the price per share of an otherwise similar call option?

Answer rating: 100% (QA)

To rule out arbitrage we can use putcall parity which states that the difference in price between a ... View the full answer