Use the Table for the Question(s)below

question 44

Multiple Choice

Use the table for the question(s) below.
Consider the following information on options from the CBOE for Merck:
-Assume it is now January of 2007 and the current risk-free interest rate is 1%.Using Put-Call Parity and the January 30 option (ask price) ,estimate the relative contribution of the near-term dividends to the value of Merck's stock.

• A)$0.54
• B)$2.35
• C)$4.30
• D)$20.19

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Definitions:

MC

Stands for Marginal Cost, which is the cost of producing one additional unit of a good or service.

MR

Marginal Revenue, the increase in revenue that results from the sale of one additional unit of output.

ATC

Average Total Cost, a calculation used in economics to find the total cost per unit of output when all fixed and variable costs are taken into account.

Economic Profits

The profit a company makes after accounting for both its explicit and implicit costs, including opportunity costs.