USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 1

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. Estimate n, which is the number of call options that must be written.

• A) -1.4286
• B) -2.9286
• C) -2.8571
• D) -2.5714
• E) -1.1111

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Definitions:

Anti-A Antibodies

Immune system proteins found in the plasma of people with type B or O blood, which target and attack A antigens on red blood cells.

Anti-D Antibodies

Antibodies formed against the Rhesus D antigen, often a concern in Rh-negative individuals during pregnancy or blood transfusion.

Blood Type

The classification of human blood based on the presence or absence of certain antigens on the surface of red blood cells, significant for blood transfusions.

Blood Chemistry Test

A lab analysis performed on a blood sample to measure various chemicals and substances in the bloodstream, aiding in diagnosis.