What Is the Value of a 6-Month Call with a Strike

question 56

Multiple Choice

What is the value of a 6-month call with a strike price of $25 given the Black-Scholes option pricing model and the following information?

• A) $0
• B) $0.93
• C) $1.06
• D) $1.85
• E) $2.14

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Definitions:

Condense

To reduce something, such as a text or statement, to make it shorter, while retaining the essential information or to change the physical state of a substance from gas to liquid.

Precipitation

The process by which water in the form of rain, snow, sleet, or hail falls from the atmosphere to the Earth's surface.

Root Systems

The underground part of a plant that absorbs water and nutrients from the soil, anchors the plant, and stores food.

Mature Soil

Soil that has developed layers and characteristics through a long process of weathering and organic matter accumulation, capable of supporting plant life.