Use the Information for the Question(s)below

question 21

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.
-Using the binomial pricing model,the calculated beta of a one-year put option on KD stock with a strike price of $20 is closest to:

• A)-7.7.
• B)2.4.
• C)4.6.
• D)-1.8.

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