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A 1-year call option with a strike price of $80 cost $20. A share costs $70....

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Finance

A 1-year call option with a strike price of $80 cost $20. Ashare costs $70. The interest rate is 10% per year. Find the costof a 1-year put option with a strike price of $80 and explain yourresult.

Answer & Explanation Solved by verified expert
3.7 Ratings (505 Votes)
The equation expressing putcall parity is C PVx P S Where CPrice of call option PV x Present valueof strike price PPrice of put option Sspot price of share    See Answer
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Transcribed Image Text

A 1-year call option with a strike price of $80 cost $20. Ashare costs $70. The interest rate is 10% per year. Find the costof a 1-year put option with a strike price of $80 and explain yourresult.

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