Use the Information for the Question(s)below

question 8

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.
-The risk-neutral probability of an up state for KD Industries is closest to:

• A)37.5%.
• B)60.0%.
• C)40.0%.
• D)62.5%.

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Definitions:

Projected Population

An estimate of future population size based on current data and trends, used for planning and policy-making purposes.

Uses and Gratification Theory

A communication theory that suggests people actively seek out media that fulfills their specific needs, such as entertainment, information, or social interaction.

Consumers' Needs

The essential requirements and desires of individuals that motivate their purchasing behaviors and choices.

Commonsense Theory

Using anecdotal information to guide understanding.