A SunSet Co

question 3

Multiple Choice

A SunSet Co.customer would like to obtain a 3-month option to purchase additional units of a product for $77 each.This product currently sells for $76 each.Assume u equals 1.1502 and d = .8694.Approximately what price per unit should SunSet charge for this option if the annual risk-free rate is 2.8 percent?

• A)$4.79
• B)$5.98
• C)$6.17
• D)$6.02
• E)$5.07

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Definitions:

Valid Argument

A logical statement where, if the premises are true, the conclusion must necessarily follow, demonstrating sound reasoning and structure.

Reflexivity Relationship

A concept where actions in a system or process produce effects that feedback into the system, potentially influencing future actions.

Valid Inference

A logical conclusion that follows the premises stated in a way that is structurally sound and true according to the rules of logic.

Fallacy of Division

A logical fallacy that arises when one assumes that something true of a whole must also be true of its parts.