Use the Two-State Put-Option Value in This Problem

question 43

Multiple Choice

Use the two-state put-option value in this problem. S_O = $100; X = $120; the two possibilities for S_T are $150 and $80. The range of P across the two states is _____, and the hedge ratio is _______.

• A) $0 and $40; −4/7
• B) $0 and $50; +4/7
• C) $0 and $40; +4/7
• D) $0 and $50; −4/7
• E) $20 and $40; +1/2

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Definitions:

Observational Learning

Learning that occurs through observing the behaviors of others and the outcomes of those behaviors.

Specific Phobia

An intense, irrational fear of a specific object, situation, or activity that leads to avoidance behavior.

Fearful Response

A psychological and physiological reaction to perceived threats, involving fear or anxiety.

Genetic Influences

The impact of genes inherited from parents on the physical and behavioral characteristics of an individual.