Assume the Risk-Free Interest Rate Is 10% and Is Equal

question 38

Multiple Choice

Assume the risk-free interest rate is 10% and is equal to fund's benchmark, the portfolio net asset value is $100, and the fund's standard deviation is 20%. Also assume time horizon of 1 year.
-What is the Black-Scholes value of the call option on management incentive fee?

• A) $6.67
• B) $8.20
• C) $9.74
• D) $10.22

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Private Business

An enterprise owned, managed, and operated by private individuals or entities, aiming to make profits without governmental ownership.

Economic Development

The process by which a nation or region improves the economic, political, and social well-being of its people.

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The national government of a federated state, which holds authority over matters that transcend regional or state boundaries, often sharing power with state or provincial governments.

Red Scare

Periods of intense fear of communism and radical political agitation in the United States, particularly prevalent after both World Wars.