Use the Following Information to Answer the Question(s)below

question 17

Multiple Choice

Use the following information to answer the question(s) below.
(Please use a copy of the Cumulative Probabilities for the standard normal distribution for these problems. )
Taggart Transcontinental's stock has a volatility of 25% and a current stock price of $40 per share.Taggart pays no dividends.The risk-free interest rate is 4%.
-Assuming the beta on Taggart stock is 0.75,then the beta for a one-year,at-the-money put option on Taggart stock is closest to:

• A)-0.75.
• B)-2.84.
• C)-3.89.
• D)-6.41.

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Definitions:

Direct Materials

The raw materials directly used in the production of a product, easily traceable to the finished good.

Materials Cost

The total expense incurred from acquiring raw materials used in the production of goods.

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory are determined by calculating the average cost of all inventory items.

Equivalent Unit

A measure used in cost accounting to express the amount of work done on incomplete products in terms of complete units of output.