What Is the Call Option Premium Given the Following Information

question 1

Multiple Choice

What is the call option premium given the following information?
$\begin{array}{lr}\text { Stock price } & \$ 36.00 \\\text { Strike price } & \$ 30.00 \\\text { Volatility } & 16\% \\\text { Pividend Yield } & 0 \\\text { Time (years) } & .75\\\text { Rigk-free Rate }&2.70\%\end{array}$

• A)$5.91
• B)$6.28
• C)$6.75
• D)$6.90
• E)$7.13

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Definitions:

Excess Goods

Products that exceed the demand in the market, often leading to surplus and potential waste.

Perfect Substitutes

Two goods that could be used in place of one another with no loss of utility to the consumer.

Utility Function

A mathematical representation of how different combinations of goods or services produce varying levels of satisfaction or utility to a consumer.

Commodities

Fundamental commodities traded in business that can be exchanged with others of alike kind.