You Have Been Granted Stock Options on 100 Shares of Your

question 27

Multiple Choice

You have been granted stock options on 100 shares of your employer's stock. The stock is currently selling for $50.63, has a dividend yield of 3.2%, and a standard deviation of 55%. The option's exercise price is $50 and the time to maturity is 15 years. What is the value of your options given a risk-free rate of 4.5%?

• A) $21.20
• B) $22.15
• C) $22.67
• D) $23.01
• E) $23.25

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Definitions:

Concept Testing

The process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions.

Late Majority

A category of consumers in the diffusion of innovation model who adopt a new product or technology after the average member of a society.

Beta Testing

The second phase of software testing in which a sample of the intended audience uses the product in a real environment to identify defects.

Market Testing

The process of evaluating the viability of a new product or service through controlled experimentation in a specific market segment before a full-scale launch.