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

question 22

Multiple Choice

Use the following information to answer the question(s) below.
(Please use a copy of the Cumulative Probabilities for the standard normal distribution for these problems. )
Taggart Transcontinental's stock has a volatility of 25% and a current stock price of $40 per share.Taggart pays no dividends.The risk-free interest rate is 4%.
-The Black-Scholes value of a one-year,at-the-money call option on Taggart stock is closest to:

• A)$1.45.
• B)$3.15.
• C)$4.75.
• D)$9.50.

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Definitions:

Free Markets

Economic systems in which prices for goods and services are determined by the open market and consumers, with minimal government intervention.

Inequality

The state of not being equal, especially in status, rights, and opportunities, often discussed in social, economic, and political contexts.

Declaration of Independence

A historical document whereby the thirteen American colonies declared their independence from British rule in 1776.

Talents and Abilities

These refer to the natural aptitudes and learned skills that individuals possess, which enable them to perform certain tasks effectively.