Suppose ABCD's Stock Price Is Currently $50

question 43

Multiple Choice

Suppose ABCD's stock price is currently $50.In the next six months it will either fall to $40 or rise to $60.What is the current value of a six-month call option with an exercise price of $50? The six-month risk-free interest rate is 2 percent (periodic rate) .

• A)$5.39
• B)$15
• C)$8.25
• D)$8.09

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Definitions:

Integrated Development Environment

An Integrated Development Environment (IDE) is a software application providing comprehensive facilities to computer programmers for software development, including a source code editor, build automation tools, and a debugger.

Custom-built Miniprograms

Small software applications designed for a specific task or function, tailored to specific needs or requirements.

Subclass

A specialized or derived class in object-oriented programming that inherits properties from a parent class.

Object-oriented Terms

Concepts and vocabulary associated with object-oriented programming, which focuses on objects rather than actions and data rather than logic.