Given the Following Information, What Is the Value of D2

question 5

Multiple Choice

Given the following information, what is the value of d2 as it is used in the Black-Scholes Option Pricing Model?
Share price €42
Time to expiration .25
Risk-free rate .055
Standard deviation .50
D1 ) 375161

• A).021608
• B).125161
• C).175608
• D).200161
• E).250161

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Definitions:

Average Rate of Return

A financial metric used to assess the profitability of an investment, measuring the average annual return compared to the initial investment cost.

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

Capital Investment Analysis

The process of evaluating and comparing the potential returns of making a new investment in capital assets, considering factors like cost, risks, and future cash flows.

Average Rate of Return

A financial metric representing the average annual earnings of an investment as a percentage of its initial cost.