Bruno's Stock Is Currently Selling for $31

question 50

Multiple Choice

Bruno's stock is currently selling for $31.74 a share but is expected to increase to either $32 or $37 a share over the next year.The risk-free rate is 3 percent.What is the current value of a 1-year call option with an exercise price of $35?

• A)$)27
• B)$)33
• C)$)64
• D)$)89
• E)$)52

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Definitions:

Legal

Pertaining to the law or the system of rules that a particular country or community recognizes as regulating the actions of its members.

Maiden Name

The surname a woman has before she gets married and often changes her surname.

Avoiding

A conflict management style of not paying attention to the conflict and not taking any action to resolve it.

Conflict Management

The practice of identifying and handling conflicts in a sensible, fair, and efficient manner.