The market price of a European call is $3.00 and its price given by BlackScholes Merton model with a volatility of 30% is $3.50. The price given by this BlackScholes Merton model for a European put option with the same strike price and time to maturity is $1.00. What should the market price of the put option be? Explain the reasons for your answer.

Chapter 1: Economics Foundations and Models Sections: 1.1, 1.2, 1.4 Section 1.1: Three Key Economic Ideas Scarcity a situation in which unlimited wants exceed the limited resources available to fulfill those wants Economics: the study of choices people make to attain their goals, given their scarce resources Economic model a simplified version of reality used to analyze...