A Stock with a Current Price of $25 Will Either

question 19

Multiple Choice

A stock with a current price of $25 will either move up to $32 or down to $20 over the next period. The risk-free rate of interest is 3.5%. What is the value of a call option with a strike price of $30?

• A)$.68
• B)$.74
• C)$.95
• D)$1.12
• E)$1.31

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Definitions:

Korea

A country in East Asia, located on the Korean Peninsula, known for its rich history and significant cultural heritage, including art, music, and cuisine.

Neolithic Majiayao Culture

An archaeological culture that existed in China during the late Neolithic period, noted for its painted pottery.

Pottery

Pottery involves the creation of objects, typically vessels, from clay and other ceramic materials, which are shaped and then fired at high temperatures to achieve hardness.

Southern Song Period

Refers to the period of the Song Dynasty in China, from 1127 to 1279, known for its advancements in art, culture, and philosophy.