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

question 17

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 an investment of a dollar at the risk-free rate returns $1.001668 after one month,what is the expected gross return of a 100-strike one-month call option under the risk-neutral probabilities?

• A)1.0010
• B)1.0017
• C)1.0100
• D)1.0167

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Definitions:

Crime Rate

A measure of the number of crimes committed per 100,000 population in a given area or period.

Crime Prone

Having a higher likelihood or predisposition to engage in criminal activities or behaviors.

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A category of people born in the same range of years.

Baby Boomer

A term used to describe a person born during the post-World War II baby boom between the years 1946 and 1964, often associated with a generation having a significant impact on economy and culture.