You Own One Call Option with an Exercise Price of $30

question 167

Multiple Choice

You own one call option with an exercise price of $30 on Nadia Interiors stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5 percent and the inflation rate is 3 percent. What is the current value of your option if it expires in one year?

• A) $.76
• B) $.79
• C) $.89
• D) $.92
• E) $.95

---

Definitions:

Pathologically Altered Tissue

Tissue that has undergone changes due to disease or disorders.

Intravenous Pyelogram (IVP)

The insertion of a radiopaque material into the vein for the purpose of X-raying the kidneys and ureters.

All-Liquid Diet

A diet consisting entirely of fluids or foods in liquid form, often recommended for medical reasons.

Dulcolax

A brand of medicine typically used as a laxative to relieve constipation or to prepare the bowel for medical procedures.