Calculate the Price of a Call Option Using the Black

question 11

Multiple Choice

Calculate the price of a call option using the Black Scholes model and the following data.Stock price = $47.30.Exercise price = $50.Time to expiration = 85 days.Risk free rate = 3.0%.Standard deviation = 35%.

• A) $1.11
• B) $2.22
• C) $3.33
• D) $4.44

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Definitions:

Accrued Salaries

Wages that have been earned by employees but have not yet been paid out.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not intended to be sold within a year.

Average Collection Period

The average number of days it takes for a company to collect payments from its credit sales.

Collection Policy

The procedures and guidelines used by a company to monitor and manage the collection of debts owed to it.