Looking at a European call option and a European put option, with the same underlying asset (JKP), same exercise price, and both expire in two months.

1. If the JKP stock price is $40, exercise price is $38, interest rate over the two-month period is 1%, and the call option is traded at a price of $5. What is the put option price?

2. If the JKP stock price is $40,exercise price is $38,interest rate over the two-month period is 1%, and the put option is traded at a price of $1.39. What is the call option price?

3. If the exercise price is $17.5,interest rate over the two-month period is 0.45%, the put option is priced at $0.75, and the call option is traded at a price of $3.33. What is the JKP stock price?

4. If the JKP stock price is $40, interest rate over the two-month period is 2%, the call option is traded at a price of $3.33, and the put option is priced at $2.55. What is the exercise price of both options?

Answer rating: 100% (QA)

Lets break down each question and solve them step by step 1 If the JKP stock price is 40 exercise price is 38 interest rate over the twomonth period i... View the full answer