One Year from Now, a Stock Is Expected to Be

question 139

Multiple Choice

One year from now, a stock is expected to be priced at either $36 or $49. Currently the stock is selling for $38.20 while Treasury bills are yielding 2.5%. What is the value of a twelve-month call
Option with an exercise price of $40?

• A) $0
• B) $1.44
• C) $2.13
• D) $3.08
• E) $4.45

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Definitions:

Farmer v. Brennan

A landmark United States Supreme Court case that addressed the rights of prisoners to be protected from harm, establishing the deliberate indifference standard for inmate welfare.

Deliberate Indifference

A conscious or intentional lack of attention or concern towards a known or obvious risk or violation of rights, often discussed in legal contexts.

Prison Rape

An act of sexual assault committed against an inmate within a prison setting.

Bureaucratic Rules

Formal regulations and procedures established by organizations or governments to structure operations, decision-making, and actions within a bureaucratic system.