A Share of Stock Is Currently Priced at $20 and Will

question 45

Multiple Choice

A share of stock is currently priced at $20 and will change with equal likelihood to either $50 or $10.A call option with a $25 exercise price is available on the stock.How many shares of stock must be purchased to replicate the payoff from owning one call option?

• A) .50 share
• B) .75 share
• C) .80 share
• D) 1.25 shares

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Definitions:

Pattern Maintenance

Refers to the processes through which social systems and structures preserve stability and continuity over time, often discussed in sociology and organizational theory.

Behavioral Organism

This term suggests an entity or being considered in terms of its observable behaviors and responses to stimuli, often in the context of behavioral sciences.

Cultural System

An organized set of symbols, beliefs, values, and practices shared by a group, which shapes its members' worldview and identity.

Personality System

A concept in psychology that refers to the organization of an individual's distinguishing personal traits, patterns of behavior, and thought processes.