Question

Tru-U stock is selling for $41 a share. A 6-month call on Tru-U stock with a strike price of $45 is priced at $1.60. Risk-free assets are currently returning .29 percent per month. What is the price of a 6-month put on Tru-U stock with a strike price of $45?

Answer 1

Answer:

$4.82

Step-by-step explanation:

Calculation for the price of the 6-month put on Tru-U stock

To find the price of a 6-month put on Tru-U stock with a strike price of $45 we are going to use Put-call parity formula to calculate it

Using this formula

Put-call parity: S + P = C + PV(E) P

Let plug in the formula

Put-call parity= $1.60 + ($45 / 1.0029^⁶) - $41 = Put-call parity=$1.60+($45/1.01752)-$41

Put-call parity=$1.60+(44.22517)-$41

Put-call parity=$45.82517-$41

Put-call parity=$4.82

Therefore the price of a 6-month put on Tru-U stock with a strike price of $45 will be $4.82