A Stock with a Current Price of $43 Will Either

question 56

Multiple Choice

A stock with a current price of $43 will either move up by a factor of 1.20 or down by a factor of .80 each period over the next two periods. The risk-free rate of interest is 3%. What is the current value of a call option with a strike price of $45?

• A)$4.38
• B)$4.55
• C)$4.72
• D)$5.16
• E)$5.27

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Definitions:

Organizational Behaviour

The study of how people interact within groups, particularly in a work setting, aiming to understand and improve job performance and satisfaction.

Values

Core beliefs or standards that guide and motivate attitudes and actions, reflecting what is important to an individual or organization.

Equity

The concept of fairness or justice in the manner of treatment or distribution of resources among individuals or groups.

Attitude

An attitude is a psychological construct representing an individual's degree of like or dislike for an item, person, thing, or event.