What Would Be the Value of an Option on a Stock

question 20

Essay

What would be the value of an option on a stock that sells at a fixed price with a standard deviation of zero? Explain.

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Definitions:

Motivation

The reason or reasons one has for acting or behaving in a particular way; the drive to achieve goals.

Performance

A measure of how well an individual, group, or system operates or accomplishes a given task or objective.

Reward

A reward is a benefit, often in the form of goods, services, or recognition, given in response to one's actions, achievements, or behavior as an incentive or acknowledgment.

Benefits

Advantages or positive outcomes derived from a particular action or situation.