Assume that the value of a put option with a strike price of $100 and six months remaining to maturity is $5. For a stock price of $110 and an interest rate of 6%, what value is closest to the corresponding call option with the same strike price and same expiration as the put option?

A- $17.87

B- $11.99

C- $12.74

What I did was compute the present value of the exercise price which came to 97.12 and then subtracted it from 110 to get C option as the answer

If you don’t know put/call parity and don’t have to show your work, you can guess at the answer.

The put has intrinsic value of $0 but is worth $5. This means the remaining time value is currently priced at $5.

The call’s intrinsic value is $10 ($110-$100) and it has same time to expiration as put. So at the very least, it should be worth about $15, as such, this price is closest to the correct answer A.