Solved

Table 12-4 the Sentient Car Wash in Luther Knows She Is in Is

question 52

Multiple Choice

Table 12-4
The sentient car wash in Luther knows she is in for a busy day when dawn breaks on a gorgeous spring morning.She is capable of washing a car every four minutes, and by the looks of things, it is reasonable to expect a steady stream of twelve cars per hour arriving.Because she is fully automatic, she knows that the four-minute estimate is accurate and invariant.She values her time at $10 per hour.Yes, it seems low, but as a single bay car wash, there are few other jobs in town she is qualified for.(We won't get into her unsuccessful turn at the beauty salon.) She estimates that customer time can be valued at $15 per hour.
-According to the information provided in Table 12-4, how much time will the average customer spend waiting in line?

Definitions:

Gamma

The curvature of an option pricing function (as a function of the value of the underlying asset).

Option Price

The price at which the holder of an options contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or security.

Hedge Ratio

A ratio used in hedging that compares the value of a position protected through a hedge with the size of the entire position itself.

Stock Price

The cost of purchasing a share of a company, reflecting the value of the company as determined by the supply and demand in the stock market.