Using the Binomial Pricing Model,the Calculated Price of a One-Year

question 42

Multiple Choice

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

• A)-7.7
• B)2.4
• C)4.6
• D)-1.8

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Definitions:

Note Issued

A written promise to pay a specified amount of money, often with interest, at a future date.

Uncollectible Receivables

Accounts receivable that are considered to be uncollectable from customers, often written off as bad debt.

Receivable Indicators

Metrics or signs used to assess the performance or status of accounts receivables within a company.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.