Ima Greedy, the CFO of Financial Saving Techniques Has Been

question 7

Multiple Choice

Ima Greedy, the CFO of Financial Saving Techniques has been granted options on 200,000 shares. The stock is currently trading at $22 a share and the options are at the money. The variance of the stock has been about .07 on an annual basis over the last several years. The options mature in 3 years and the risk free rate is 4%.
-What is d₂?

• A).0121
• B).0252
• C).0326
• D).0452
• E).0525

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Definitions:

Spot Market

A market where financial instruments or commodities are traded for immediate delivery, as opposed to future or forward delivery.

Forward Market

A market in which participants agree to trade a financial instrument or physical commodity for future delivery at a specified price.

Absolute Purchasing Power Parity

A theory stating that identical goods and services in different countries should cost the same when priced in a common currency.

Standardized Good

a product that is produced to a set standard, making it interchangeable with similar products.