Use the Following Information to Answer the Question(s)below

question 3

Multiple Choice

Use the following information to answer the question(s) below.
Consider an American put option on Rearden Metal stock with a strike price of $60 and one year to expiration.Assume that Rearden pays no dividends,its stock is currently trading at $15 per share,and the one-year interest rate is 5%.Also assume that it is optimal to exercise this put option early.
-The maximum value of a one-year American call option on Rearden Metal with a strike price of $60 per share is closest to:

• A)$0.
• B)$1.84.
• C)$2.48.
• D)$2.86.

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Definitions:

Civic Virtue

The cultivation of habits important for the success of the community. Emphasizes actions that support the collective well-being.

Self-interest

The motivation by individuals to pursue actions or goals that are beneficial to themselves.

Common Good

A concept that refers to either policies or actions that benefit all members of a given community or society.

Veto Power

The authority to reject or prohibit proposals or laws, often held by a president, governor, or other leader.