Use the Information for the Question(s)below

question 37

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.
-Using the binomial pricing model,the calculated price of a one-year call option on KD stock with a strike price of $20 is closest to:

• A)$2.40.
• B)$2.00.
• C)$2.15.
• D)$1.45.

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Definitions:

Segment Data

Financial information broken down into smaller units, such as product lines or geographical markets, within an organization.

Subsidiary Ledger

A subsidiary ledger is a detailed ledger that contains account information related to a specific subsidiary account, which is then summarized in a general ledger.

General Ledger

A full archive of all monetary dealings across the duration of a company's history.

Posting References

Codes or numbers in accounting that link journal entries to specific accounts in the ledger, aiding in traceability and audit trails.