Assume a Stock Price of $34

question 22

Multiple Choice

Assume a stock price of $34.80, an exercise price of $35, nine months to expiration, risk-free rate of 2.40 percent, standard deviation of 57 percent, and a d₁ value of .27167. What is the value of d₂ as it is used in the Black-Scholes option pricing model?

• A) −.22196
• B) −.18657
• C) −.18241
• D) −.27427
• E) −.22238

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Definitions:

Principled Heuristics

Decision-making shortcuts based on ethical principles or standards, enabling quick judgments that align with established moral values.

Sociocultural Norms

The shared customs, behaviors, and beliefs that dictate the expected way of living within a specific society or cultural group.

Moral Principles

Fundamental beliefs about what is right and wrong, which guide individuals' behaviors and decisions.

Termination-At-Will

An employment agreement or condition where either the employer or the employee can end the employment without needing to give a reason, subject to any legal restrictions.