Use the Following Information to Answer the Following Question(s)

question 47

Multiple Choice

Use the following information to answer the following question(s) .
Valuing a call option using the Black-Scholes model:
Current price of ABZ stock = $50
Exercise or strike price of the call option = $48
The maturity of the option is 0.5 years
The annualized variance in the returns on the stock is .20
The risk free rate of interest is 3% per annum
-What is the value of d₁ that should be used when calculating the value of a call option on this stock with the Black-Scholes option pricing model.

• A).33464
• B).07483
• C).40822
• D).01842

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Definitions:

Forced Distributions

A method of evaluating employees that requires raters to categorize employees.

Central Tendency

A statistical measure that identifies the single value that most accurately represents a set of data, commonly using the mean, median, or mode.

Comparative Evaluation

The process of comparing one set of data, elements, or situations with another to assess its value or performance in relation to a standard or another entity.

Ranking Method

A method of evaluating employees that ranks them from best to worst on some trait.