Ima Greedy, the CFO of Financial Saving Techniques Has Been

question 22

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 the value of a call option?

• A)$4.14
• B)$4.86
• C)$5.13
• D)$5.62
• E)$6.16

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Definitions:

Shareholder Sells

The process whereby an owner of shares in a corporation disposes of their stock to another party.

New Corporation

A business entity that has recently been formed and has obtained legal recognition from the state.

Benefit Corporation

A type of business structure that embeds social and environmental objectives into its charter in addition to profit-making goals.

Legal Goals

Objectives that laws and legal systems aim to achieve, such as justice, protection of rights, and maintenance of social order.