Suppose ABC's Stock Price Is Currently $25

question 13

Multiple Choice

Suppose ABC's stock price is currently $25.In the next six months it will either fall to $15 or rise to $40.What is the current value of a six-month call option with an exercise price of $20? The six-month risk-free interest rate is 5% (periodic rate) .[Use the risk-neutral valuation method.]

• A)$20.00
• B)$8.57
• C)$9.52
• D)$13.10

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Definitions:

Psychotherapy

A therapeutic treatment method involving talking with a mental health professional to understand and overcome psychological issues.

Carl Rogers

An influential American psychologist who founded the humanistic approach to psychology, emphasizing the importance of the self and the individual's potential for personal growth.

Unconditional Self-Regard

The acceptance and appreciation of oneself without judgment or evaluation.

Carl Rogers

An influential American psychologist who founded the client-centered approach to psychotherapy and emphasized the importance of empathy, unconditional positive regard, and genuineness in therapy.