The Current Price of Silver Is $ 31

question 16

Multiple Choice

The current price of silver is $ 31.00 per ounce.The effective lease rate and risk free rate are 1.0% and 3.5%,respectively.If the cost to mine one ounce of silver is a constant $25.00,what is the value of an option to wait and mine the silver later?

• A) $13.50
• B) $14.50
• C) $15.50
• D) $16.50

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