Use the Information for the Question(s) Below

question 16

Multiple Choice

Use the information for the question(s) below.
The current price of KD Industries' stock is $20. In the next year the stock price will either go up by 20% or go down by 20%. KD pays no dividends. The one year risk-free rate is 5% and will remain constant.
-Assuming the beta on KD stock is 1.1,the calculated beta for a one-year call option on KD stock with a strike price of $20 is closest to:

• A) -1.8
• B) 2.4
• C) -7.7
• D) 4.6

---

Definitions:

Hot Wheels

A brand of die-cast toy cars introduced by American toy maker Mattel in 1968, known for their detailed designs and wide variety of models.

Agent Of Socialization

A person, group, or institution that plays a critical role in integrating individuals into the broader society by teaching them its norms, values, and customs.

Secondary School

An educational institution for students typically aged between 11 to 18, providing intermediate education between primary school and higher education.

Social Networking Sites

Online platforms that enable users to create a public profile, interact with friends, and engage in various social activities over the Internet.