The Common Stock of Trynor's, Inc

question 423

Multiple Choice

The common stock of Trynor's, Inc. is currently priced at $37.90 a share. One year from now, the stock price is expected to be either $38 or $43 a share. The risk-free rate of return is 3.5 percent. What is the current value of one call option on this stock if the exercise price is $40?

• A) $0.64
• B) $0.71
• C) $0.77
• D) $0.82
• E) $0.91

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Definitions:

Glycolysis

The metabolic pathway that converts glucose into pyruvate, releasing energy and pyruvic acid as end products.

Glucose

An essential energy-supplying sugar, fundamental to living entities and found in a vast array of carbohydrates.

Aerobic Respiration

A process of producing cellular energy involving oxygen. Cells use oxygen to convert glucose into ATP, releasing carbon dioxide and water.

Oxidized

Refers to a substance that has lost electrons and increased its oxidation state, often as part of a chemical reaction involving oxygen.