The Values of a Stock Price at the End of the Second

question 9

Multiple Choice

The values of a stock price at the end of the second time step are $80,$100,$125.The corresponding values of an option are $0,$5,and $20 respectively.What is an estimate of gamma?

• A) 0.136
• B) 0.146
• C) 0.156
• D) 0.166

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Definitions:

Ratio

A quantitative relationship between two numbers, often used in financial analysis to assess the performance, liquidity, or solvency of a business.

Capital Account

In macroeconomics and international finance, a component of the balance of payments that records all transactions involving the purchase or sale of assets.

Ownership Interest

A stake or share in a company or asset, representing the rights and financial involvement of the owner.

Additional Partner

An individual or entity that joins an existing partnership, contributing capital and sharing in the profits and losses.