Alpha Stock Is Currently Trading at $34

question 26

Multiple Choice

Alpha stock is currently trading at $34.50 a share and the 6-month call options are at the money.The stock returns have a standard deviation of 21 percent and the risk-free rate is 4.21 percent.What is the price of the call option per share given that N(d₁) is .585508 and N(d₂₎ is .526913?

• A)$1.07
• B)$2.79
• C)$1.38
• D)$2.40
• E)$1.64

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Definitions:

Research Design

The structured plan or strategy developed to explore a specific problem or question, guiding the collection and analysis of data.

Hypotheses

Tentative explanations or propositions made on the basis of limited evidence as a starting point for further investigation.

Observations

The process of monitoring, recording, and analyzing phenomena to obtain information or awareness about certain conditions or situations.

Research Measurements

Research measurements involve the processes and instruments used to quantify variables in research, allowing for the collection of data needed to test hypotheses.