Assume S = $46,K = 45,div = 0,r = 0

question 8

Multiple Choice

Assume S = $46,K = 45,div = 0,r = 0.03,σ = 0.20,and 50 days until expiration.What is the premium on a knock-out put option with an up-and-out barrier of $50?

• A) $0.83
• B) $0.93
• C) $1.13
• D) $1.33

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Definitions:

Moderator Variables

Variables that explain when, where, or for whom an effect is most likely to occur.

Random Assignment

A method in experimental design where participants are allocated to different groups on a random basis to reduce bias and increase the validity of the results.

Construct Validity

The extent to which a test or instrument measures the theoretical construct it's intended to measure.

Experimenter Bias

The possibility that the experimenter’s knowledge of the condition a particular participant is in could affect her behavior toward the participant and thereby introduce a confounding variable to the independent variable manipulation.