Using a Binomial Tree,what Is the Price of a $40

question 13

Multiple Choice

Using a binomial tree,what is the price of a $40 strike 6-month call option,using 3-month intervals as the time period? Assume the following data: S = $37.90,r = 5.0%,σ = 0.35

• A) $2.50
• B) $2.76
• C) $2.92
• D) $3.08

---

Definitions:

Register Securities

The process of filing securities with the appropriate regulatory body, providing necessary information before they can be legally sold to the public.

Federal Registration Requirement

Federal Registration Requirement mandates that certain securities and financial transactions must be registered with a governmental body, typically to ensure transparency and protect investors.

State Registration Requirement

Legal stipulation that mandates entities or individuals to register with state authorities for conducting certain activities.

Initial Public Offering

The process by which a private company offers shares to the public for the first time to raise capital.