Current Price of a Stock Is $22, and at the End

question 15

Multiple Choice

current price of a stock is $22, and at the end of one year its price will be either $27 or $17 The annual risk-free rate is 6.0%, based on daily compounding A 1-year call option on the stock, with an exercise price of $22, is available Based on the binominal model, what is the option's value?

• A) $2.43
• B) $2.70
• C) $2.99
• D) $3.29
• E) $3.62

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Definitions:

Protein Structure

The three-dimensional arrangement of atoms in an amino acid-chain molecule. Proteins have a complex structure, including primary, secondary, tertiary, and quaternary formations, that determines their function in biological systems.

Disaccharide Molecule

A sugar (carbohydrate) composed of two monosaccharides bonded together, example includes sucrose.

Glucose Molecules

Simple sugar molecules that are an important energy source in living organisms and a component of many carbohydrates.

Water Molecule

A compound made up of two hydrogen atoms bonded to one oxygen atom, forming the chemical formula H2O, essential for all known forms of life.