Note: Correct Answers to Later Questions Are Dependent on Correct

question 5

Multiple Choice

Note: Correct answers to later questions are dependent on correct answers to earlier questions.
-Ima Greedy,the CFO of Financial Saving Techniques has been granted options on 200,000 shares. The stock is currently trading at $22 a share and the options are at the money. The variance of the stock has been about .07 on an annual basis over the last several years. The options mature in 3 years and the risk free rate is 4%.
What is the value of a call option?

• A) $4.14
• B) $4.86
• C) $5.13
• D) $5.62
• E) $6.16

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