A Stock Is Currently Priced at $38

question 72

Multiple Choice

A stock is currently priced at $38. A call option with an expiration of one year has an exercise price of $40. The risk-free rate is 4.2 percent per year, compounded continuously, and the standard deviation of the stock's return is infinitely large. What is the price of the call option?

• A) $2.47
• B) $34.80
• C) $38.00
• D) $5.63
• E) $40.00

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Definitions:

Parent's Face

The visage of a child's primary caregiver, often recognized and preferred by infants for comfort and security.

Act Anxious

The exhibition of behaviors and responses that are indicative of anxiety, including restlessness, nervousness, and tension.

Nervous

Experiencing or showing feelings of anxiety, apprehension, or unease.

Fathers

Fathers are male parents who contribute to the upbringing and care of their children, playing a crucial role in their developmental and emotional well-being.