Exhibit 13-6
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT

question 97

Multiple Choice

Exhibit 13-6
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION(S)
The current stock price of ABC Corporation is $53.50. ABC Corporation has the following put and call option prices that expire 6 months from today. The risk-free rate of return is 5% and the expected return on the market is 11%. $\begin{array}{ccc}\text { Exercise Price } & \text { Put Price } & \text { Call Price } \\\hline50 & \$ 1.50 & \$ 5.75 \\55 & \$ 3.25 & \ldots\end{array}$
-Refer to Exhibit 13-6. What is the value of a synthetic stock created with put and call options that expire in 6 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:

Transposition Error

A specific type of accounting error caused by switching the order of digits in a number, often leading to discrepancies in financial records.

Debit Column

Refers to the section in accounting records where decreases in liabilities, or increases in assets and expenses are logged.

Trial Balance

An accounting report that lists the balances of all ledger accounts at a particular point in time to ensure that debits equal credits.

Ledger Balances

The total balances of all accounts in a ledger at a specific point in time, reflecting the cumulative effect of all transactions.