Use the Information for the Question(s)below

question 14

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 risk-neutral probabilities,the calculated price of a one-year call option on KD stock with a strike price of $20 is closest to:

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

---

Definitions:

E-mail Ads

Digital advertisements sent through electronic mail to promote products or services.

Court

A government institution authorized to hear and decide legal cases, interpret laws, and administer justice.

Internet Service Provider

An Internet Service Provider (ISP) is a company that offers services for accessing, using, or participating in the Internet.

Personal Information

Data relating to an individual that can be used to identify, contact, or locate them.