You Own One Call Option with an Exercise Price of $40

question 7

Multiple Choice

You own one call option with an exercise price of $40 on S'more Good stock.The stock is currently selling for $41 a share but is expected to sell for either $37 or $43 a share in one year.The risk-free rate of return is 4.25 percent and the inflation rate is 3.6 percent.What is the current call option price if the option expires one year from now?

• A)$0.55
• B)$0.69
• C)$1.37
• D)$2.43
• E)$2.75

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Definitions:

Ideal Individual

A concept or model of a person who embodies the most perfect or desirable attributes, characteristics, or behaviors.

Greenberg's Emotion-Focused

A therapeutic approach developed by Leslie S. Greenberg that emphasizes the importance of emotional awareness, expression, regulation, and transformation in healing.

Gestalt Therapy

A form of psychotherapy that focuses on the individual's experience in the present moment, the therapist-client relationship, and the environmental and social contexts of a person's life.

Experiential Therapy

A therapeutic method encouraging patients to identify and address hidden or subconscious issues through activities that allow them to experience emotions and insights directly.