Exhibit 20 -A Stock Currently Trades for $63

question 28

Multiple Choice

Exhibit 20.6
Use the Information Below for the Following Problem(S)
The current stock price of ABC Corporation is $53.50. ABC Corporation has the following put and call option prices that expire 6 months from today. The risk-free rate of return is 5% and the expected return on the market is 11%.
$$\begin{array} { c c c } \text { Exprcisp Price } & \text { Put Price } & \text { Call Price } \\50 & \$ 1.50 & \$ 5.75 \\55 & \$ 3.25 & \ldots\end{array}$$
-A stock currently trades for $63.Call options with a strike price of $62 sell for $4.00 and expire in 6 months.If the risk-free rate is 4% what should the price of a put option with an exercise price of $62 be worth?

• A) $0.62
• B) $0.98
• C) $1.80
• D) $3.00
• E) $5.80

---

Definitions:

Maintenance Schedules

Predefined plans for performing maintenance activities on equipment, facilities, or software to ensure their optimal performance and to prevent failures.

Scientific Management Era

A period in management history focused on improving labor productivity through scientific methods, attributed to Frederick W. Taylor in the early 20th century.

Frank Gilbreth

An early 20th-century engineer and efficiency expert known for his work in time and motion study and contributions to industrial engineering.

W. Edwards Deming

An American engineer, statistician, professor, author, lecturer, and management consultant known for his work in the field of quality management.