The Following Information Is Given About Options on the Stock $\sigma$

question 19

Multiple Choice

The following information is given about options on the stock of a certain company.
S₀ = 23 X = 20
r_c = 0.09 T = 0.5
$\sigma$ ² = 0.15
No dividends are expected.
Use this information to answer questions 1 through 8.
-If we now assume that the stock pays a single dividend of 2.25 in three months,what stock price should we use in the model? (Due to differences in rounding your calculations may be slightly different."none of the above" should be selected only if your answer is different by more than 10 cents. )

• A)17.75
• B)20.75
• C)20.00
• D)20.80
• E)none of the above

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