A call option with 1 month to expiration currently sells for $0.70.A put option with the same expiration sells for $1.10.The options are European style.The risk-free rate is 3 percent and the strike price of both options is $18.00.What is the current stock price?
A) $16.87
B) $17.06
C) $17.29
D) $17.56
E) $17.86

Question

Quizplus · Accepted Answer

Stock price = $0.70 - $1.10 + $18.00 / (1 + 0.03)^{1 / 12} = $17.56

A Call Option with 1 Month to Expiration Currently Sells