Using the Following Information, Find the Price of the Call

question 20

Multiple Choice

Using the following information, find the price of the call option:
Stock price S_t=$ 55, Interest rate I=5%,
Strike price X=$ 52, Put premium=$ 1, Maturity: T=3 months

• A)$6.47
• B)$0.62
• C)$8.47
• D)$4.64

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Definitions:

Operating Activity

Activities that constitute the primary or core business functions, including sales and service provision, and their related expenses, generating most of the company's cash flows.

Cash Flows

Cash flows refer to the movement of money into and out of a business, indicative of its liquidity, operational efficiency, and financial health.

Cash Receipts

Cash receipts refer to the collection of money, including checks, cash, and credit card charges, received by a business for goods or services it has sold.

Cash Payments

Money that is paid out by a business, often for expenses, debt, or purchases.