Use the Black-Scholes Option Pricing Model for the Following Problem

question 20

Multiple Choice

Use the Black-Scholes Option Pricing Model for the following problem.Given: S_O= $70;X = $70;T = 70 days;r = 0.06 annually (0.0001648 daily) ;σ = 0.020506 (daily) .No dividends will be paid before option expires.The value of the call option is

• A) $10.16.
• B) $5.16.
• C) $0.00.
• D) $2.16.
• E) none of these.

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Definitions:

OCD

Obsessive-Compulsive Disorder (OCD) is a mental health disorder characterized by recurring, unwanted thoughts (obsessions) and repetitive behaviors (compulsions) that a person feels compelled to perform.

Incidence

Refers to the frequency or rate at which new cases of a particular disease or condition occur in a specified population over a certain period of time.

Teens And Young Adults

Teens and young adults refer to individuals in the age group from adolescence to early adulthood, typically covering ages 13 through 24.

Obsession

Persistent, unwanted thoughts that cause distress or anxiety.