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Basic Question 2 of 11
An investor purchases a 3-month put option on a stock with an exercise price of $35. The risk-free rate is 4.50%. At expiration, the stock price is $33.50. The option's payoff is closest to ______.
B. $1.48
C. $1.50
A. $0
B. $1.48
C. $1.50
User Contributed Comments 3
| User | Comment |
|---|---|
| Inaganti6 | Why was the risk free rate given..... |
| Kiniry | ^To throw you off. |
| khalifa92 | interest rates aren't applied to put options cause u dont have the money but in the case of call options u have the money and convenience to invest them until exercising. |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
contrast the use of arbitrage and replication concepts in pricing forward commitments and contingent claims
CFA® 2025 Level I Curriculum, Volume 5, Module 8.