Assume the Following Data: Stock Price = $50; Exercise Price

question 37

Multiple Choice

Assume the following data: Stock price = $50; Exercise price = $45; Risk-free rate = 6 percent per year; Continuously compounded variance = 0.2; Expiration = three months. Calculate the value of a European call option. (Use the Black-Scholes formula.)

• A)$7.62
• B)$7.90
• C)$5
• D)$5.92

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Definitions:

Natural Consequence

The outcome that naturally follows an action or behavior without any external intervention.

Non-Being

A philosophical concept referring to the absence or negation of being or existence.

Death Instinct

In psychoanalytic theory, an underlying drive towards death, self-destruction, or the return to an inorganic state, as opposed by the life instincts.

Awareness of Ultimate Concerns

The conscious recognition of one's deep and fundamental worries or existential questions, which can affect one's psychological well-being.