What Is the Call Option Premium Given the Following Information

question 49

Multiple Choice

What is the call option premium given the following information?

• A)$1.86
• B)$2.20
• C)$2.36
• D)$2.98
• E)$3.30

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Definitions:

Erosion

The gradual reduction or diminution of something, often referring to the wearing away of assets, margins, or competitive advantage over time.

New Product

An item or service that has been recently developed or introduced to the market.

Erosion

The process of gradual diminishment or reduction, often used in finance to describe the erosion of value or profit.

Incremental Cash Flow

The additional cash flow a project generates compared to a baseline or the current level.