What Is the Current Value of a Six-Month Call Option

question 54

Multiple Choice

What is the current value of a six-month call option with an exercise price of $12? The six-month risk-free interest rate is 5% per six-month period.[Use the risk-neutral valuation method.]

• A)$9.78
• B)$10.28
• C)$16.88
• D)$13.33

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Definitions:

Depth Perception

The visual ability to perceive the world in three dimensions and to understand spatial relationships.

Presbyopia

A natural age-related condition where the eye's lens loses its ability to focus properly, making it difficult to see objects up close.

Lens

A lens is a piece of transparent material with curved surfaces, typically used in glasses and optical devices to focus or disperse light rays and form images.

Tinnitus

A condition characterized by hearing noises not caused by an external source, often described as ringing, buzzing, or humming in the ears.