Bonds Maturing in 1,2,and 3 Years Have Prices of 0

question 17

Multiple Choice

Bonds maturing in 1,2,and 3 years have prices of 0.9345,0.8766,and 0.8212,respectively.What is the price of a call option that expires in two years and gives you the right to pay 0.8600 to buy the 1-year bond? Assume σ = 0.15.

• A) $0.015
• B) $0.105
• C) $0.205
• D) $0.305

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Definitions:

Calls for Nursing

Instances or situations that demand the unique knowledge, skills, and compassion of nurses to provide care and improve patient outcomes.

Nurturance of Personhood

The act of supporting and fostering an individual's sense of self, identity, and personal growth, emphasizing the value of human uniqueness.

Heptane

A straight-chain alkane with seven carbon atoms in its molecule, often used as a nonpolar solvent in laboratories.

Moles

A unit of measurement used in chemistry to express amounts of a chemical substance, defined as containing exactly 6.02214076×10^23 particles.