A Futures Price Is Currently 40 Cents

question 8

Multiple Choice

A futures price is currently 40 cents.It is expected to move up to 44 cents or down to 34 cents in the next six months.The risk-free interest rate is 6%.What is the value of a six month call option with a strike price of 39 cents?

• A) 5.00 cents
• B) 2.91 cents
• C) 3.00 cents
• D) 4.21 cents

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Definitions:

Meiosis

A specialized form of cell division that reduces the chromosome number by half, resulting in the production of four gamete cells, each genetically distinct from the parent cell that gave rise to them.

DNA

Deoxyribonucleic acid, the molecule that carries the genetic instructions used in the growth, development, functioning, and reproduction of all known living organisms and many viruses.

Sister Chromatids

Sister chromatids are two identical copies of a single replicated chromosome that are connected by a centromere and eventually separated during cell division.

Meiosis

A type of cell division that reduces the chromosome number by half, resulting in the production of haploid sex cells or gametes.