Cyril Is Purchasing a Down-And-In Cash Call

question 6

Multiple Choice

Cyril is purchasing a down-and-in cash call.H = $45.00,S = $38.24,K = $35,σ = 0.33,r = 0.05,div = 0 and it expires in 140 days.What is the value of the option if the payment is $1.00?

• A) $0.80
• B) $1.80
• C) $2.80
• D) $3.80

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Definitions:

Full Warranty

A comprehensive guarantee that covers the repair or replacement of any defect in a product within a specified period.

Magnuson-Moss Act

The Magnuson-Moss Act is a federal law aimed at protecting consumers from deceptive warranty practices, requiring warranties to be clear and comprehensive.

Defective Part

A component or piece of a larger item that has a flaw or imperfection, rendering it unfit for its intended use.

Implied Warranty

A legal guarantee that the goods being sold will be functional and meet certain standards of quality and reliability, even if not explicitly stated.