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

question 4

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%.
-The Black-Scholes value of a one-year,at-the-money put option on Taggart stock is closest to:

• A)$1.45.
• B)$3.15.
• C)$4.75.
• D)$9.50.

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Definitions:

Deductive Reasoning

A logical process where a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Specific Observations

are detailed and focused observations that are made to gather information about a particular, narrowly defined subject or phenomenon.

DNA Molecule

The molecule carrying genetic instructions for the development, functioning, growth, and reproduction of all known living organisms and many viruses.

Nucleotides

The basic building blocks of nucleic acids (DNA and RNA), composed of a sugar, a phosphate group, and a nitrogenous base.