A Share of Stock Is Currently Priced at $20 and Will

question 92

Multiple Choice

A share of stock is currently priced at $20 and will change with equal likelihood to either $40 or $10.A call option with a $20 exercise price is available on the stock.The interest rate is zero.Which of the following positions will provide (approximately) the same payoffs as the option?

• A) Buy 0.667 shares and lend $6.67
• B) Buy 0.667 shares and borrow $6.67
• C) Buy 0.5 shares
• D) Sell 0.667 shares and borrow $0.667

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Simulated exercises or educational games designed to teach management and business skills.

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The process of enhancing an individual's skills and abilities to lead, guide, or influence others effectively in various situations or roles.

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