When the Non-Dividend Paying Stock Price Is $20,the Strike Price

question 15

Multiple Choice

When the non-dividend paying stock price is $20,the strike price is $20,the risk-free rate is 6%,the volatility is 20% and the time to maturity is 3 months which of the following is the price of a European call option on the stock

• A) 20N(0.1)-19.7N(0.2)
• B) 20N(0.2)-19.7N(0.1)
• C) 19.7N(0.2)-20N(0.1)
• D) 19.7N(0.1)-20N(0.2)

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Definitions:

Rights Offering

A financial mechanism allowing current shareholders to purchase additional shares directly from the company at a specified price before the shares are offered to the public.

Underwriting Provision

A clause or condition included in financial agreements, often in insurance or security underwriting, detailing specific obligations or requirements.

Debt Offerings

The issuance of bonds or other borrowing instruments by entities to raise capital.