Shares of a Stock Are Currently Priced at $28

question 286

Multiple Choice

Shares of a stock are currently priced at $28. The future price is expected to be either $27 or $32. The risk-free rate of return is 5%. What is the value of a twelve-month $25 call option?

• A) $3.00
• B) $3.19
• C) $4.00
• D) $4.19
• E) $8.19

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Definitions:

Physical Equipment

Tangible assets used in the operation or execution of tasks within a business, project, or any endeavor that involves mechanical or electronic tools.

Input

Represents data or signals that are entered into a system for processing or analysis.

Processing

The execution of tasks by a computer or processing unit, often referring to the manipulation or transformation of data.

Output

In a general context, output refers to the result or product generated as a consequence of a process, system, or activity, which can be in the form of data, goods, or services.