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

question 35

Multiple Choice

A one-year European call option on ABX corporation with a strike price of $50 is currently trading for $4.30,and a one-year European put option on ABX with the same strike price is currently trading for $1.47.If the stock pays no dividends and the risk free rate is 4% per year,what is the current price of ABX stock?

• A)$39.79
• B)$41.57
• C)$45.25
• D)$50.91
• E)$53.85

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Definitions:

Simulation

The act of imitating the operation of a real-world process or system over time, often used for analysis, training, or entertainment.

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Manufacture Consent

The process by which powerful entities, such as the media or government, create a consensus among the public through manipulation, often to serve their own interests.

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Traditional forms of mass communication, such as newspapers, television, and radio, that reach a large audience and significantly influence public perception.