Suppose VS's Stock Price Is Currently $20

question 19

Multiple Choice

Suppose VS's stock price is currently $20.In the next six months it will either fall to $10 or rise to $30.What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5 percent per six-month period.

• A)$5
• B)$2.14
• C)$0.86
• D)$7.86

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Definitions:

Mean Difference

Mean difference, also known as the average difference, refers to the arithmetic mean of differences between paired observations in two sample sets.

Same Individuals

Referring to using the same group of subjects or samples in different conditions or periods of a study or experiment.

Matched Pairs

A study design in which subjects are paired based on certain characteristics, with one subject from each pair receiving each treatment.

Parameter

A numerical characteristic or measure of a population, such as its mean or variance, which is often estimated using sample data.