The Current Price of a Stock Is $100 $- \$ 1$

question 12

Multiple Choice

The current price of a stock is $100.The stock pays a dividend of $2 in three months.The risk free rate of interest for all maturities in annualized and continuously-compounded terms is 2%.What is the minimum price of an at-the-money American call option on the stock with six months maturity?

• A) \(- \$ 1\)
• B)$0
• C)$1
• D)$2

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Definitions:

Identical Twins

Twins who originate from a single fertilized egg that splits into two, sharing 100% of their DNA and often having very similar physical traits and sometimes behaviors.

Fraternal Twins

Siblings born at the same time who have developed from two separate eggs fertilized by two different sperm, genetically unique from each other.

Amygdala

A region of the brain within the temporal lobe, involved in emotion regulation, especially fear and pleasure.

Sympathetic Division

Part of the ANS that is responsible for reacting to stressful events and bodily arousal; “fight-or-flight system.”