Answer:
The price of a one-year European put option on the stock with a strike price of $50 is $2.09
Step-by-step explanation:
As, the call and the put option is of the same asset class, we apply call-put parity to find the price of the European put option.
The call-put parity function is:
C + PV(x) = P + S; in which:
C: Price of the call option = $6;
PV(x) : present value of strike price = Strike price in one year / e^6% = 50/e^6% = $47.09
P: price of the put option
S: spot price of the asset = $51
=> P = C + PV(x) - S = 6 + 47.09 - 51 = $2.09.