Assume a Stock Price of S(0)= $45 $\sqrt[3]{S}$ ? Use Formula 20

question 13

Multiple Choice

Assume a stock price of S(0) = $45.00,r = 0.03,σ = 0.40,and dividend = 0.015.What is the price of a claim that pays $\sqrt[3]{S}$ ? Use formula 20.29.

• A) $6.41
• B) $5.41
• C) $4.41
• D) $3.41

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Definitions:

Costs

Expenses incurred in the process of producing or acquiring goods and services.

Volume

The quantity or amount of something, often used in context with sales volume or production volume.

Variable Cost

Expenses that change in proportion to the activity of a business, such as costs for raw materials, packaging, or labor directly associated with product manufacturing.

Activity Levels

The amount of effort or capacity utilized in the operations of a business, which can influence cost and operational efficiency.