Consider a Stock Priced at $30 with a Standard Deviation

question 38

Multiple Choice

Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options) . Use this information to answer questions 1 through 10.
-What is the maximum profit that the writer of a call can make?

• A)$2,711
• B)$289
• C)$3,000
• D)$3,289
• E)none of the above

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Definitions:

Bases of Individual Power

Refers to the sources from which an individual derives their ability to influence others, such as expertise or position.

Rosabeth Moss Kanter

A renowned professor of business at Harvard Business School, known for her research on change management and confidence.

Power

The ability or capacity to influence or control the behavior of others, often through the possession of knowledge, resources, or authority.

Dependence

A situation in which one entity relies on another for support, resources, or needs fulfillment.