Suppose VS's Stock Price Is Currently $20

question 36

Multiple Choice

Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5 percent per six-month period.

• A)$5.00
• B)$2.14
• C)$0.86
• D)$7.86

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Definitions:

Shaping

Shaping is a psychological conditioning technique in which successive approximations toward a desired behavior are reinforced, gradually leading to the adoption of the behavior.

Reinforcing

The process of encouraging or establishing a pattern of behavior by offering rewards or incentives.

Behavioral Goals

Specific objectives set to change or maintain an individual's behavior, often involving measurable and achievable steps.

Positive Reinforcement

A technique in behavior modification that involves giving a reward to increase the likelihood of a desired response.