Assume a Stock Price of $31

question 33

Multiple Choice

Assume a stock price of $31.18, risk-free rate of 3.6 percent, standard deviation of 44 percent, N(d₁) value of .62789, and an N(d₂) value of .54232. What is the value of a 3-month call option with a strike price of $30 given the Black-Scholes option pricing model?

• A) $3.38
• B) $3.99
• C) $3.68
• D) $1.76
• E) $3.45

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Definitions:

Secondary Boycott

A form of protest in which a union encourages both its members and the general public not to buy the products of a company that is involved in a dispute.

Lockout

A tactic used by employers where they prevent employees from working during a labor dispute, often to pressure the union to accept contract terms.

RICO Act

The Racketeer Influenced and Corrupt Organizations Act, a United States federal law designed to combat organized crime by allowing prosecution and civil penalties for racketeering activity.

Sympathy Strike

A labor strike by one union in support of another union's strike, even though the first union does not have a direct dispute with the employer.