Which One of the Following Situations Will Produce the Highest

question 69

Multiple Choice

Which one of the following situations will produce the highest put price,all else constant? Assume the options are all in-the-money.

• A) $30 stock price; 20 percent standard deviation
• B) $30 stock price; 25 percent standard deviation
• C) $35 stock price; 20 percent standard deviation
• D) $35 stock price; 25 percent standard deviation
• E) Insufficient information is provided to answer this question.

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Definitions:

Fixed Resource

An asset or input whose quantity cannot be altered in the short run for the production of goods and services.

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used by a business, easily identifiable and recorded.

Entrepreneurial Talent

The unique set of skills, insight, and intuition possessed by individuals that enables them to identify and exploit new business opportunities.

Forgone Interest

The potential interest income lost when capital is invested in one project instead of being deposited in a savings account or invested in an alternative project.