S Suppose a stock price can go up by 15.25 % or down by 13.25 %...
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S Suppose a stock price can go up by 15.25 % or down by 13.25 % over the next year. You own a one-year put on the stock. The interest rate is 11%, and the current stock price is $61. a. What exercise price leaves you indifferent between holding the put or exercising it now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Break-even exercise price b. How does this break-even exercise price change if the interest rate is increased? If the interest rate is increased, the value of the put option increases S Suppose a stock price can go up by 15.25 % or down by 13.25 % over the next year. You own a one-year put on the stock. The interest rate is 11%, and the current stock price is $61. a. What exercise price leaves you indifferent between holding the put or exercising it now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Break-even exercise price b. How does this break-even exercise price change if the interest rate is increased? If the interest rate is increased, the value of the put option increases
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