Suppose VS's Stock Price Is Currently $20

question 38

Multiple Choice

Suppose VS's stock price is currently $20. In the next six months it will either fall by 50 percent or rise by 50 percent. What is the current value of a call option with an exercise price of $15 and expiration of one year? The six-month risk-free interest rate is 5 percent (periodic rate) . Use the two-stage binomial method.

• A)$5.00
• B)$2.14
• C)$7.86
• D)$8.23

---

Definitions:

Flashbacks

Sudden, intense re-experiencings of past traumatic events, often a symptom of PTSD (Post-Traumatic Stress Disorder).

Decreased Motor Activity

A reduction in physical movements or actions, often resulting from neurological or physical conditions.

Rape Telephone Hotline

A confidential service offering support, information, and resources to individuals affected by sexual assault.

Sympathetic Listener

Someone who actively listens and shows empathy towards another's feelings or situations, providing emotional support without judgment.