The Current Price of a Stock Is $100

question 4

Multiple Choice

The current price of a stock is $100.Consider the Black-Scholes model price of a six-month call option at strike $101,given an interest rate of 2% and a dividend rate of 1%? The volatility is 25%.What is the real-world (physical) probability of the option ending up in the money if the growth rate of the stock is expected to be 5% per year?

• A)0.45
• B)0.48
• C)0.49
• D)0.50

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Definitions:

RhoGAM

A medication used to prevent Rh incompatibility issues in pregnancies by stopping the mother's immune system from attacking the baby's red blood cells.

Rh-negative

A blood type classification indicating the absence of Rh factor, a protein on the surface of red blood cells.

Hemoglobin

Hemoglobin is a protein in red blood cells responsible for transporting oxygen from the lungs to the rest of the body and returning carbon dioxide back to the lungs.

Fibrinogens

Plasma proteins that are converted into fibrin in the blood clotting process, playing a crucial role in wound healing.