Suppose a stock price can go up by 1 6 . 2 5 % or down by

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Question:

Suppose a stock price can go up by

16.25 %

or down by

14.25 %

over the next year. You own a one

-

year put on the stock. The interest rate is

10 %,

and the current stock price is $

65 .

What exercise price leaves you indifferent between holding the put or exercising it now?

Note: Do not round intermediate calculations. Round your answer to

2

decimal places.

How does this break

-

even exercise price change if the interest rate is increased?

Posted Date: May 18, 2024 08:05 PM

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Suppose a stock price can go up by 1 6 . 2 5 % or down by

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