The Price of Dimension, Inc

question 1

Multiple Choice

The price of Dimension, Inc. stock will be either $65 or $85 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent. Suppose the current price of Dimension stock is $70. What is the value of the call option if the exercise price is $70 per share?

• A)$6.07
• B)$8.48
• C)$11.58
• D)$15.39
• E)$17.62

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