The Common Stock of Winsson,Inc

question 71

Multiple Choice

The common stock of Winsson,Inc. is currently priced at $52.50 a share. One year from now,the stock price is expected to be either $54 or $60 a share. The risk-free rate of return is 4%. What is the value of one call option on Winsson stock with an exercise price of $55?

• A) $0.39
• B) $0.41
• C) $0.45
• D) $0.48
• E) $0.51

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Definitions:

Variables

Attributes, characteristics, or conditions that can change or vary within or across subjects in a study.

Prediction

An educated guess about future events based on current knowledge, data, or trends.

Predictor Variables

Variables that are used in statistical models to predict or explain variations in another variable, often the dependent variable.

Criterion Variable

A dependent variable that is influenced by other variables in a study.