Exhibit 14-3 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION(S)

question 95

Multiple Choice

Exhibit 14-3
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION(S)
The following information is provided in the context of a two period (two six month periods) binomial option pricing model. A stock currently trades at $60 per share, a call option on the stock has an exercise price of $65. The stock is equally likely to rise by 15% or fall by 15% during each six month period. The one-year risk free rate is 3%.
-Refer to Exhibit 14-3. Calculate the possible prices of the stock at the end of one year.

• A) $69, $51, $79.35
• B) $51, $79.35, $58.65
• C) $79.35, $58.65, $43.35
• D) $58.65, $43.35, $14.35
• E) None of the above

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Definitions:

Drug Group

A classification of medications or compounds with similar chemical structures, mechanisms of action, therapeutic uses, or side effects.

Addiction

A complex brain disorder characterized by escalation, compulsive drug taking, and relapse; called substance use disorder per the DSM-5.

Schizophrenia

A mental disorder characterized by disruptions in thought processes, perceptions, emotional responsiveness, and social interactions, presenting symptoms like hallucinations and delusions.

Incidence

The frequency or rate at which certain events or cases occur within a specified population over a particular period of time.