A Call Option with a Strike Price of $85 Is

question 15

Multiple Choice

A call option with a strike price of $85 is currently trading at $6.17. The stock price is $86 and the risk-free rate is 5 percent. If the option has 48 days to maturity, what is the implied standard deviation?

• A) 47.29%
• B) 52.18%
• C) 57.21%
• D) 43.44%
• E) 38.67%

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Definitions:

Vouchers Payable

An accounting term that represents the obligation of a business to pay for goods or services that have been received, but not yet paid for.

Purchases Discount

A contra-cost account in the general ledger that records discounts offered by vendors of merchandise for prompt payment of purchases by buyers.

Merchandise

Goods brought into a store for resale to customers.

Purchase Discounts

Reductions in price given by a supplier to a buyer for early payment within a specified period.