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:

Organic Compound

A chemical compound containing carbon atoms bonded to hydrogen atoms and possibly other elements, excluding oxides, carbides, and carbonates.

Palmitic Acid

A saturated fatty acid found in fats and waxes including olive oil, palm oil, and body lipids, used in the production of soaps and cosmetics.

Octadecanal

An organic compound belonging to the aldehyde group with an 18-carbon chain.

Stearic Acid

A saturated fatty acid commonly found in animal and vegetable fats, used in various manufacturing processes.