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A Binary Option Pays of $100 If a Non-Dividend-Paying Stock

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A binary option pays of $100 if a non-dividend-paying stock price is greater than its current value in three months.The risk-free rate is 3% and the volatility is 40%.Which of the following is its value?


Definitions:

Sensory Responsiveness

Describes an individual's tendency to react to and process sensory information in a particular way, which can vary widely among different people.

Difference Threshold

The minimum change in stimulation required to detect a difference between two stimuli, also known as the just noticeable difference (JND).

Heavier Objects

Objects with greater mass or weight compared to other items in their comparison set.

Weber's Law

A principle in psychology stating that the change in a stimulus that will be just noticeable is a constant ratio of the original stimulus.

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