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A Binary Option Pays Off $100 If a Non-Dividend-Paying Stock

question 19

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A binary option pays off $100 if a non-dividend-paying stock price is greater than its current value in three months.The risk-free rate is 3% and the volatility is 40%.Which of the following is its value?


Definitions:

Transorbital Lobotomy

A form of lobotomy introduced in the 1940s that involves severing connections in the brain's prefrontal lobe, through the eye sockets, to treat mental illnesses.

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The soft, complex substance that makes up the brain, comprising neurons and supportive cells.

Social Breakdown Syndrome

A theory that attributes mental illness to the breakdown of societal support and community structures, leading to isolation and dysfunctional behavior.

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The process by which institutions decline in effectiveness, quality, or health, often due to mismanagement or neglect.

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