In a One-Period Binomial Model,assume That the Current Stock Price

question 9

Multiple Choice

In a one-period binomial model,assume that the current stock price is $100,and that it will rise to $110 or fall to $90 after one month.If the risk-free rate is 0.1668% per month in simple terms,what is the price of a 99-strike one-month put option?

• A)$4.02
• B)$4.42
• C)$4.49
• D)$4.57

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Definitions:

Direct Labor-Hours

A measure of the work done by employees directly involved in the manufacturing process, counted in hours.

Activity Cost Pools

A grouping of all costs associated with a specific activity, used in activity-based costing to more accurately allocate overhead costs.

Activity Rates

Rates used in Activity-Based Costing to assign overhead costs to products or services, based on specific activities that drive those costs.

Activity-Based Costing

An accounting method that assigns overhead and indirect costs to related products and services based on the activities that drive those costs.