Current value of stock in portfolio with current option price Rs 20 is Rs 50, then present value of portfolio would be

Rs 30.00
Rs 70.00
Rs 40.00
Rs 80.00

The correct answer is $\boxed{\text{B}}$.

The present value of a portfolio is the sum of the present values of the individual assets in the portfolio. The present value of an asset is the current value of the asset, discounted by the risk-free rate of interest.

In this case, the current value of the stock is Rs 50 and the current option price is Rs 20. The risk-free rate of interest is assumed to be 10%.

The present value of the stock is therefore:

$PV_S = \frac{50}{(1+0.1)^1} = 45.45$

The present value of the option is therefore:

$PV_O = \frac{20}{(1+0.1)^1} = 18.18$

The present value of the portfolio is therefore:

$PV_P = PV_S + PV_O = 45.45 + 18.18 = 63.63$

Therefore, the present value of the portfolio is Rs 63.63.

Exit mobile version