Lapel IncStock Price Is $32

question 18

Multiple Choice

Lapel Inc.stock price is $32.00.Joe bets Sarah that the price will be above $35.00 in 6 months (180 days) .The standard deviation of the stock is 0.25 and the risk free interest rate is 5.0%.If Joe wins the bet,he wishes to be paid with one share of stock.If Sarah agrees to the bet,what is the value of her wager?

• A) $3.00
• B) $9.65
• C) $12.44
• D) $19.58

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Definitions:

Mining Rights

Legal permissions granted to companies or individuals to extract minerals or other valuable materials from the earth.

Depletion Expense

An accounting concept used to allocate the cost associated with natural resource extraction over the period of their removal or sale.

Accumulated Depletion

The total value of natural resource extraction from a property, representing the reduction of the asset's value on the balance sheet over time.

Ore

A naturally occurring solid material from which a metal or valuable mineral can be extracted profitably.