IMNotGreedy Has Been Granted Options on 50,000 Shares

question 41

Multiple Choice

I.M.Not.Greedy has been granted options on 50,000 shares.The stock is currently trading at $17 a share and the options are at the money.The volatility of the stock returns averages 16 percent.The options mature in 2 years and the risk-free rate is 3.45 percent.N(d₁) is .662055 and N(d₂) is .576052.Given this information,what is the value of a call option on one share of this stock?

• A)$2.11
• B)$1.70
• C)$1.89
• D)$2.28
• E)$2.21