A Stock Priced at $65 Has a Standard Deviation of 30

question 74

Multiple Choice

A stock priced at $65 has a standard deviation of 30%. Three month calls and puts with an exercise price of $60 are available. The calls have a premium of $7.27 and the puts cost $1.10. The risk free rate is 5%. Since the theoretical value of the put is $1.525, you believe the puts are undervalued.
-A put option has a strike price of $35 and a stock price of $38.If the call option is trading at $1.25,what is the time value embedded in the option?

• A) $0.00
• B) $0.75
• C) $1.25
• D) $3.00

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Definitions:

Schizophrenia

A psychiatric disorder marked by significant disruptions in thought processes, perceptions, emotional responsiveness, and social interactions.

Genetic Vulnerability

A predisposition to develop certain conditions or diseases based on one’s genetic makeup.

Concordance Rates

The probability that two individuals with shared genetic or environmental factors will both display a particular trait or characteristic, often used in twin studies.

Fraternal Twins

Twins that result from the fertilization of two different eggs by two different sperm, resulting in siblings that are not genetically identical.