Use the Information for the Question(s)below

question 11

Multiple Choice

Use the information for the question(s) below.
The current price of KD Industries stock is $20.In the next year the stock price will either go up by 20% or go down by 20%.KD pays no dividends.The one-year risk-free rate is 5% and will remain constant.
-The risk-neutral probability of a down state for KD Industries is closest to:

• A)37.5%.
• B)62.5%.
• C)40.0%.
• D)60.0%.

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Definitions:

Tui Na

A form of Chinese manipulative therapy often used in conjunction with acupuncture, moxibustion, and other traditional Chinese medicinal practices to treat a variety of conditions.

Tai Chi

A Chinese martial art practiced for both its defense training and its health benefits, emphasizing fluid, gentle movements.

Qui Gong

A traditional Chinese practice combining movement, meditation, and controlled breathing to enhance physical and mental well-being.

Ovo-lacto-vegetarian

A person who does not consume meat but includes eggs and dairy products in their diet.