Use the Following Graph to Answer the Questions That Follow

question 1

Multiple Choice

Use the following graph to answer the questions that follow.

-What is the price of cars if this is a non-trading (closed) economy?

• A) $6,000 per car
• B) $8,000 per car
• C) $10,000 per car
• D) $14,000 per car
• E) $24,000 per car

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Definitions:

Volatility

Refers to the degree of variation in the price of a financial instrument over time, indicating the risk associated with the price changes of that instrument.

Expiration

The date on which a financial contract or derivative expires, after which the contract is either settled or no longer valid.

Black Scholes Model

A mathematical model of a financial market containing derivative investment instruments, used to price European options.

Dividend Yield

A ratio demonstrating the yearly dividends a company distributes in relation to its share price.