Exhibit 14-1 THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)

question 26

Multiple Choice

Exhibit 14-1
THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)
A stock currently trades for $130 per share. Options on the stock are available with a strike price of $125. The options expire in 10 days. The risk free rate is 3% over this time period, and the expected volatility is 0.35.
-Refer to Exhibit 14-1. Use the Black-Scholes option pricing model to calculate the price of a call option.

• A) $5.19
• B) $4.35
• C) $3.93
• D) $6.19
• E) $8.17

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Definitions:

Tort Law

A segment of law that addresses, remedies, and compensates for civil wrongs not arising out of contractual obligations.

Economic Interests

The financial stakes or advantages that individuals or organizations seek to achieve, which influence their decisions and behaviors in economic contexts.

Fraudulent Misrepresentation

A false statement made knowingly, without belief in its truth, or recklessly, with intent to deceive and induce another to act upon it.

Falsely Tells

Communicating untruths or inaccurate information, either knowingly or unintentionally.