A Call Option with a $50 Strike Price on Bavarian

question 3

Multiple Choice

A call option with a $50 strike price on Bavarian Sausage stock will expire in one year.If you know that the risk free rate is 4%,that the stock currently sells at $47 and the put on the same stock has a value of $2.75,what is the price of the call?

• A) $2.75
• B) $3.56
• C) $1.67
• D) $5.36

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Definitions:

Bacterial Chromosome

The circular DNA found in bacteria that contains all of the genetic information necessary for cell function and reproduction.

Circular DNA Molecule

DNA that forms a closed loop, found in prokaryotes and in the mitochondria and chloroplasts of eukaryotic cells.

Bidirectionally

In a manner that allows movement or communication in two opposite directions.

Okazaki Fragments

Short sequences of DNA nucleotides which are synthesized discontinuously and later linked together by the enzyme DNA ligase to create the lagging strand during DNA replication.