Question: can you explain this please Question 1:(25 Marks By assuming the following data: One year to maturity A $90 exercise price A current stock price

can you explain this please

Question 1:(25 Marks By assuming the following data: One year to maturity A $90 exercise price A current stock price of $8. A one year risk free rate... of 12 percent The call option is certain to finish in the money Price of a similar PUT option is A). Calculate the price of a Call Option. Show your formula and calculations Expert Answer A Anonymous 26 minutes later Solution: Calculation of price of a call option: We can calculate the price of a call option using put call parity equation as follow Price of call option+present value of exercise price=Price of put option+Current stock price Price of call option+($90/(1+0.12)=$0+$85 Price of call option=$85-$80.36 = $4.64

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