The 3-Month Options on XYZ Stock Have a Strike Price

question 9

Multiple Choice

The 3-month options on XYZ stock have a strike price of $35 while the stock price is $43.The risk-free rate is 3.15 percent,the standard deviation is 27 percent,N(d₁) is 0.95060 and N(d₂) is 0.93520.What is the call price?

• A)$4.14
• B)$4.72
• C)$8.40
• D)$6.56
• E)$5.64

---

Definitions:

Shipping Terms

Agreements or conditions that specify the responsibilities of the buyer and seller in the delivery of goods, including who pays for shipping and insurance.

Merchandise

Goods that are bought and sold in the course of business, usually in a retail environment.

Delivery Expense

The costs incurred by a business to transport its goods to the customer, often treated as a direct or indirect expense depending on the nature of the expense allocation.

Expense Account

An accounting account that tracks money spent or costs incurred in a business entity's operation.