Assume stock XYZ does not pay dividends and has a market value of $78 per share. There is a 60-percent chance that the stock will trade for $330 in one year, and a 40-percent chance that it will trade for $65 in one year. What is the value of a put option with an exercise price of $90 if the risk-free rate is 8 percent per year?

Answer rating: 100% (QA)

A put option is inthemoney when the current market value of the underl... View the full answer