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Put option and a call option

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A put option and a call option with an exercise price of $85 and three months to expiration sell for $3.15 and $6.12 respectively. If the risk free rate is 4.8% per year, compounded continuously, what is the current stock price?

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Solution Summary

The expert examines put option and a call option.

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c + PV(x) = p + s
c = the current price or market value of the European call
x = option strike ...

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