Ima Greedy, the CFO of Financial Saving Techniques Has Been

question 21

Multiple Choice

Ima Greedy, the CFO of Financial Saving Techniques has been granted options on 200,000 shares. The stock is currently trading at $22 a share and the options are at the money. The volatility of the stock has been about.20 on an annual basis over the last several years. The option mature in 3 years and the risk free rate is 4%. What is the value of a call option?

• A) $3.14
• B) $5.86
• C) $4.26
• D) $5.62
• E) $6.16

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Definitions:

Correlation Coefficient

A statistical measure that indicates the extent to which two variables fluctuate together, reflecting the strength and direction of their relationship.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables on a scatterplot.

Numerical Index

A numerical representation or measurement, often used for comparing statistical data, assessing performance, or tracking changes over time.

Normally Distributed

Describes a statistical distribution where data points are symmetrically distributed around the mean, forming a bell-shaped curve.