A Call Option with a $35 Strike Price on Bavarian

question 86

Multiple Choice

A call option with a $35 strike price on Bavarian Sausage stock will expire in one year.If you know that the risk free rate is 6%,that the stock currently sells at $38 and the put on the same stock has a value of $3.85,what is the price of the call?

• A) $3.85
• B) $6.26
• C) $7.34
• D) $8.83

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Definitions:

Pharynx

A muscular tube that connects the mouth and nasal cavity to the esophagus and larynx, playing a key role in swallowing and breathing.

Bronchi

The major air passages of the lungs that diverge from the windpipe, providing the pathway for air flow.

Alveoli

Minute pulmonary vesicles where oxygen is swapped for carbon dioxide in the respiratory process.

Bronchial Constriction

The narrowing of the bronchi in the lungs due to the tightening of surrounding smooth muscle, leading to difficulty breathing.