USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 54

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The information provided is relevant in the context of a one period (one year) binomial option pricing model. A stock currently trades at $50 per share, and a call option on the stock has an exercise price of $45. The stock is equally likely to rise by 25 percent or fall by 25 percent. The one-year, risk-free rate is 2 percent.
-Refer to Exhibit 16.5. Calculate the price of the call option today (C₀) .

• A) $7.56
• B) $17.48
• C) $9.26
• D) $5.0
• E) $17.15

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Definitions:

Urban Areas

Regions characterized by high population density and vast human features in comparison to areas surrounding it.

Ozone Depletion

The reduction in the concentration of ozone in the Earth's stratosphere, leading to an increased risk of sun-related skin damage and other environmental issues.

Biodiversity

The variety and variability of life forms within a given ecosystem, region, or on the entire Earth, important for maintaining ecological balance and resilience.

Wildlife Habitats

Natural environments where wildlife species live, grow, and reproduce, including forests, deserts, wetlands, and grasslands.