The Price of a Stock Is Currently $50

question 65

Multiple Choice

The price of a stock is currently $50. Over the course of the next year, the price is anticipated to rise to $55 or decline to $46. If both outcomes are equally likely and the risk free interest rate is 3%, what is the price of a one year call option with an exercise price of $50 using the binomial model?

• A) $2.43
• B) $2.50
• C) $2.66
• D) $2.70

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Definitions:

Masturbate

The act of sexually stimulating oneself, often leading to orgasm.

Think About Sex

The cognitive process involving consideration or contemplation of sexual matters, which can be influenced by biological, psychological, and social factors.

Casual Sex

Sexual activity outside the context of a committed relationship, typically emphasizing physical pleasure without emotional bonding.

Affection

A feeling of fondness or liking towards someone or something, typically demonstrated through physical or emotional closeness and caring behaviors.