Use the Following Information to Answer the Question(s)below

question 22

Multiple Choice

Use the following information to answer the question(s) below.
(Please use a copy of the Cumulative Probabilities for the standard normal distribution for these problems. )
Taggart Transcontinental's stock has a volatility of 25% and a current stock price of $40 per share.Taggart pays no dividends.The risk-free interest rate is 4%.
-The Black-Scholes value of a one-year,at-the-money call option on Taggart stock is closest to:

• A)$1.45.
• B)$3.15.
• C)$4.75.
• D)$9.50.

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Definitions:

Population Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data values for the entire population.

Ounces

A unit of weight in the United States customary and British imperial systems, equal to 1/16 of a pound.

Margin of Error

The amount of error allowed in a survey or experiment results, expressing the confidence in the reliability of the data.

Confidence Level

The degree of certainty, often expressed as a percentage, that a parameter lies within a specified range.