Apply the Black-Scholes Formula to the Pricing of a 6-Month

question 22

Multiple Choice

Apply the Black-Scholes formula to the pricing of a 6-month call option with an exercise price of $85 on a stock with a current price of $85.The standard deviation of the annual stock return is 32%.The 6-month interest rate is 2.5%.

• A)$8.64
• B)$8.98
• C)$7.18
• D)$6.45

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Definitions:

Obsessive-Compulsive Disorder

A mental disorder characterized by recurring unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Virtual Reality Exposure Therapy

A form of therapy that uses virtual reality technology to expose patients to their fears or traumatic memories in a controlled environment, helping them cope with or overcome their anxieties.

Client-Centered Therapy

A psychotherapeutic approach developed by Carl Rogers that emphasizes providing a supportive emotional environment where clients can express themselves freely.

Confirmation Bias

The predisposition to choose, interpret, esteem, and keep in mind evidence in a fashion that reinforces already held beliefs or propositions.