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.

---

Definitions:

Annual Dividend

The total dividend payments a company makes to its shareholders in a year, often divided into quarterly payments.

Return Requirement

The minimum expected return an investor requires from an investment to make it worthwhile, considering the risk involved.

Dividend Irrelevance Hypothesis

A theory suggesting that the dividend policy of a company is irrelevant to its market value, as long as the firm's investment and financing decisions are unchanged.

Larger Dividends

An increase in the amount of money paid out to shareholders from a company's earnings, typically reflecting its strong financial health or a strategy to return more capital to investors.