Exhibit 14-2 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION(S)

question 9

Multiple Choice

Exhibit 14-2
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION(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, a call option on the stock has an exercise price of $45. The stock is equally likely to rise by 25% or fall by 25%. The one-year risk free rate is 2%.
-Refer to Exhibit 14-2. Estimate n, 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:

Point-of-Purchase

The place or moment at which a transaction occurs, often used in marketing to refer to the physical or digital location where a product is bought.

ABC Model

The ABC model is a framework in psychology that describes the relationships between antecedents, behaviors, and consequences, often used in cognitive-behavioral therapy.

Attitude Object

Any entity that is capable of being evaluated or judged, and towards which an attitude is held, ranging from physical objects and people to ideas and policies.

Behaviour

Actions or reactions of an individual or group in response to external or internal stimuli.