A One-Year European Call Option on ABX Corporation with a Strike

question 24

Multiple Choice

A one-year European call option on ABX corporation with a strike price of $50 is currently trading for $1.45,and a one-year European put option on ABX with the same strike price is currently trading for $6.22.If the stock pays a one-time dividend of $1.50 in exactly 6 months,and the risk-free rate is 8% per year,what is the current price of ABX stock?

• A)$42.97
• B)$43.03
• C)$49.63
• D)$52.53
• E)$55.41

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Definitions:

Automatic Functions

Features or operations within a device, system, or vehicle that operate without manual intervention, often based on specific conditions or triggers.

Main Pressure

The primary pressure within a system, such as the oil pressure in an engine or the hydraulic fluid pressure in machinery, vital for proper operation.

Pressure Relief Valve

A safety device designed to open and release excess pressure from a system, preventing potential damage or failure.

Integral Retarders

Mechanical devices integrated within a vehicle's drivetrain that assist in slowing down the vehicle by using resistance forces, without using the traditional brakes.