The correct answer is A ($28.25). According to put-call parity for European options, the relationship is given by:

$S_0 + P_0 = C_0 + \frac{X}{(1 + r)^T}$

Where:

• $S_0$ is the spot price ($40),
• $P_0$ is the put premium,
• $C_0$ is the call premium ($10),
• $X$ is the strike price ($60),
• $r$ is the interest rate (3%),
• $T$ is the time to expiry (1 year).

Substituting the values:

$40 + P_0 = 10 + \frac{60}{1.03}$

Solving for $P_0$:

$P_0 = 10 + \frac{60}{1.03} - 40 = 28.25242718 \approx 28.25$

**Option B ($30.00)** is incorrect because it fails to discount the strike price by$(1 + r)^T$.

Option C ($108.25) is incorrect because it incorrectly adds the spot price instead of subtracting it from the discounted strike price.