Answer: 5.34%

## Explanation To solve for the implied dividend yield, we use the **put-call parity** formula for European options with continuous dividends: \[ C - P = S_0 e^{-qT} - K e^{-rT} \] Where: - \( C \) = Call price = USD 10 - \( P \) = Put price = USD 15 - \( S_0 \) = Initial stock price = USD 85 - \( K \) = Strike price = USD 90 - \( r \) = Risk-free rate = 5% = 0.05 - \( q \) = Dividend yield (what we're solving for) - \( T \) = Time to maturity = 5 years Substituting the values: \[ 10 - 15 = 85 e^{-q \times 5} - 90 e^{-0.05 \times 5} \] \[ -5 = 85 e^{-5q} - 90 e^{-0.25} \] \[ -5 = 85 e^{-5q} - 90 \times 0.7788 \] \[ -5 = 85 e^{-5q} - 70.092 \] \[ 85 e^{-5q} = 65.092 \] \[ e^{-5q} = \frac{65.092}{85} = 0.7658 \] \[ -5q = \ln(0.7658) = -0.2667 \] \[ q = \frac{0.2667}{5} = 0.05334 = 5.334\% \] However, this gives us 5.34%, which corresponds to option C. But let me double-check the calculation: \[ e^{-0.25} = 0.77880078 \] \[ 90 \times 0.77880078 = 70.09207 \] \[ 85 e^{-5q} = 70.09207 - 5 = 65.09207 \] \[ e^{-5q} = 65.09207 / 85 = 0.765789 \] \[ -5q = \ln(0.765789) = -0.26678 \] \[ q = 0.26678 / 5 = 0.053356 = 5.3356\% \] This confirms that the calculated dividend yield is approximately 5.34%, which matches option C. **Therefore, the correct answer is C: 5.34%**

Author: LeetQuiz Editorial Team