The Common Stock of Mercury Motors Is Selling for $43

question 218

Multiple Choice

The common stock of Mercury Motors is selling for $43.90 a share. Treasury bills are currently yielding 4.5 percent. What is the current value of a one-year call option on Mercury Motors stock if the exercise price is $37.50 and you assume the option will finish in the money?

• A) $6.12
• B) $6.40
• C) $6.69
• D) $7.67
• E) $8.01

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Definitions:

Frequency Polygon

A graphical representation of the distribution of a dataset that shows how often each value occurs, connecting the middle of each interval.

Histogram

A graphical representation of the distribution of numerical data, often displaying the frequency of data points within specified intervals.

Ordinal Level

A measurement scale that organizes data into categories that are ranked or ordered based on some criteria.

Class Interval

The range of values within which data points are grouped together in the creation of a frequency distribution.