A Stock with a Current Price of $25 Will Either

question 40

Multiple Choice

A stock with a current price of $25 will either move up to $32 or down to $20 over the next period.The risk-free rate of interest is 3.5 percent.What is the value of a call option with a strike price of $30?

• A) $0.61
• B) $0.72
• C) $0.93
• D) $1.11
• E) $1.36

---

Definitions:

Negative Punishment

A behavioral principle where the removal of a desirable stimulus following a behavior decreases the likelihood of that behavior occurring in the future.

Shaping

Gradual training that rewards behavior progressively closer to the desired one.

Positive Punishment

A concept in behavioral psychology where an undesirable stimulus is introduced following a behavior to decrease that behavior's frequency.

Secondary Learning

The process of acquiring knowledge or skills that builds upon or derives from previously learned primary concepts or abilities.