Suppose Ralph's Stock Price Is Currently $50

question 34

Multiple Choice

Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise to $80. What is the option delta of a call option with an exercise price of $50?

• A)0.375
• B)0.500
• C)0.600
• D)0.750

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Definitions:

Threatening Impulses

Internal desires or drives that are perceived as dangerous or unacceptable, leading to anxiety or distress.

Defense Mechanism

Psychological strategies employed by the unconscious mind to manipulate, deny, or distort reality in order to defend against feelings of anxiety and unacceptable impulses.

Reaction Formation

A defense mechanism where an individual behaves in a way opposite to their actual feelings or impulses, often to hide those feelings from themselves and others.

Defense Mechanism

Psychological strategies unconsciously used to protect oneself from anxiety arising from unacceptable thoughts or feelings.