What Is the Call Option Premium Given the Following Information

question 29

Multiple Choice

What is the call option premium given the following information?
$\begin{array}{lc}\text { Stock price } & \$50 \\\text { Call strike price } & \$ 45\\\text { Volatility (std dev) } & 15\% \\\text { Time (years) } & .25 \\\text { Risk-free rate } & 2.00\% \\\text { Dividend yield } & 0\%\end{array}$

• A)$4.86
• B)$5.04
• C)$5.16
• D)$5.34
• E)$5.50

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Definitions:

X-bar

A symbol representing the mean of a sample in statistical processes, commonly used in control charts to monitor process performance.

R-charts

Control charts used to monitor the range within a sample, helping to identify variability in a process over time.

Sample Averages

The mean of a set of data points taken from a larger population, used in statistics to estimate the characteristics of the whole population.

X-bar

A statistical term representing the average or mean value of a set of data, commonly used in quality control processes.