A European call and a european put on a stock have the same strike price and time to maturity. At 10:00 am on a certain day, the price of the call is $3 and the price of the put is $4. At 10:01 am news reaches the market that has no effect on the stock price or interest rates, but increases volatilities. As a result the price of the call changes to $3.5?
Which of the following is correct and show your calculations:
a. The put price increases to 4.5
b. The put price decreases to 3.5
c. The put price increases to 5.5
d. it is possible that there is no effect on the put price
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A European call and a european put on a stock have the same strike price and time to maturity. At 10:00 am on a certain day, the price of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
The case of Max v. National Credit Co. is heard in a trial court. The case of O! Boy! Ice Cream Co. v. Refrigerated Transport, Inc. is heard in an appellate court. The difference between a trial and an appellate court is whether A.
Answers (1)
Propaganda gives both side of a situation
Answers (1)
Olivia deposited $800 at her local credit union in a savings account at the rate of 6.2% paid as simple interest. She will earn interest once a year for the next 7 years.
Answers (1)
Which of the following is not a name for indirect resources? Multiple Choice Overhead costs Burden Direct costs Common costs
Answers (1)
Example of the business that mainly belongs in the client service group is
Answers (1)
New Questions in Business
Kathleen is a member of the human resource department at Jade Corp. Setting a goal to enhance the firm's strategy, Kathleen works to attain it by understanding the current human resources.
Answers (1)
The ratio of the number of companies offering both a stock-options incentive and one of the benefits listed to the number of companies offering that benefit is greatest for which of the five benefits? A. Health insurance B. Flex-time C.
Answers (1)
A government bond is NOT as liquid as cash because the bond: A) can be exchanged only for the goods or services produced by the company that issued the bond.
Answers (1)
Is wearing glasses all the time bad?
Answers (1)
The following data are for the Akron Division of Consolidated Rubber, Inc.: Sales $ 820,000 Net operating income $ 59,000 Average operating assets $ 320,000 Stockholders' equity $ 82,000 Residual income $ 22,000 For the past year, the minimum
Answers (1)