You Own One Call Option with an Exercise Price of $30

question 20

Multiple Choice

You own one call option with an exercise price of $30 on Nadia Interiors stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5% and the inflation rate is 3%. What is the current value of your option if it expires in one year?

• A) $0.76
• B) $0.79
• C) $0.89
• D) $0.92
• E) $0.95

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Definitions:

Patriarchy

A system where men control the political and economic resources of society. A pervasive and complex social and cultural system of male domination.

Anthony Giddens

A prominent British sociologist known for his theory of structuration and his holistic view of modern societies.

Institutions

Structures or mechanisms of social order and cooperation governing the behavior of a set of individuals within a given community.

Critical Race Theory

A theoretical framework that suggests race is a social construct designed to maintain the interests of the white majority in societal structures.