Wilt's Has a Stock Price of $38 a Share

question 67

Multiple Choice

Wilt's has a stock price of $38 a share.The 9-month options have a strike price of $45.The risk-free rate is 3.2 percent,the standard deviation is 21 percent,N(d₁) is 0.23985 and N(d₂) is 0.18710.What is the call price?

• A)$)68
• B)$)89
• C)$1.03
• D)$1.21
• E)$1.17

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Definitions:

Allocation of Shares

The process of distributing shares of stock among investors.

Oversubscribed

A situation in which the demand for an IPO or a new issue of securities exceeds the number of shares available.

Rights Offering

A method by which a company raises capital through issuing new shares to existing shareholders at a predetermined price for a fixed period.

Ownership Percentage

Ownership percentage refers to the fraction or percentage of a company that is owned by a particular shareholder or group of shareholders.