A Binary Option Pays of $100 If a Stock Price

question 3

Multiple Choice

A binary option pays of $100 if a stock price is greater than its current value in three months. The risk-free rate is 3% and the volatility is 40%. Which of the following is its value?

• A) 99.25N(-0.1375)
• B) 99.25N(0.1375)
• C) 99.25N(-0.0625)
• D) 99.25N(0.0625)

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Definitions:

Archaea

A domain of single-celled microorganisms that are genetically distinct from bacteria and eukaryotes, often found in extreme environments.

Histone Proteins

Proteins that package and order the DNA into structural units called nucleosomes, playing a crucial role in gene regulation.

Germline Mutations

Genetic alterations that occur in the reproductive cells of an organism and can be passed on to its offspring, potentially causing inherited disorders or traits.

Somatic Mutations

Genetic alterations acquired by a cell that can occur after conception, affecting all descendants of the mutated cell within an organism but not passed on to offspring.