USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 31

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The current stock price of ABC Corporation is $53.50. ABC Corporation has the following put and call option prices that expire six months from today. The risk-free rate of return is 5 percent, and the expected return on the market is 11 percent.

-Refer to Exhibit 14.4. What is the value of a synthetic stock created with put and call options that expire in six months with an expiration price of $50?

• A) $53.04
• B) $53.53
• C) $54.54
• D) $55.03
• E) $56.23

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Definitions:

Superfund

A U.S. federal government program established to fund the cleanup of sites contaminated with hazardous substances and pollutants.

Comprehensive Environmental Response, Compensation, and Liability Act

A federal law, also known as Superfund, designed to clean up sites contaminated with hazardous substances and pollutants.

National Pollution Discharge Elimination System

A regulatory program under the Clean Water Act that aims to control water pollution by regulating point sources that discharge pollutants into US waters.

Industrial Discharge Permits

Regulatory authorizations required for the release of wastewater or pollutants from industrial facilities into the environment, ensuring adherence to environmental standards.