The Share Price of Ajax Inc

question 16

Multiple Choice

The share price of Ajax Inc. is currently $105. The share price a year from now will be either $130 or $90 with equal probabilities. The interest rate at which investors can borrow is 10%. Using the binomial OPM, the value of a call option with an exercise price of $110 and an expiration date one year from now should be worth ________ today.

• A)$11.59
• B)$15.00
• C)$20.00
• D)$40.00

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Definitions:

Accountability

The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

Organizational Experiences

The cumulative interactions and events individuals encounter within a workplace, shaping their perceptions, attitudes, and behaviors toward the organization.

Legends

Traditional stories or myths passed down through generations, often with historical or cultural significance but not verifiable.

Competing Values Framework

A procedure that provides a way to identify, measure, and change organizational culture.