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.
-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:

Federal Labor Law

Legislation that regulates the rights and duties between employers and workers at the national level.

Majority Vote

A voting requirement that more than half of the votes cast by members entitled to vote are necessary to make a decision or pass a proposal.

Floral Workers Union

A labor union representing the interests and rights of workers within the floristry industry.

Labor-Management Relations Act

A law, also known as the Taft-Hartley Act, that regulates the relations between labor unions and employers.