The Following Prices Are Available for Call and Put Options

question 21

Multiple Choice

The following prices are available for call and put options on a stock priced at $50.The risk-free rate is 6 percent and the volatility is 0.35.The March options have 90 days remaining and the June options have 180 days remaining.The Black-Scholes model was used to obtain the prices.
Use this information to answer questions 1 through 20.Assume that each transaction consists of one contract (for 100 shares) unless otherwise indicated.
For questions 1 through 6,consider a bull money spread using the March 45/50 calls.
-How much will the spread cost?

• A)$986
• B)$302
• C)$283
• D)$193
• E)none of the above

---

Definitions:

Important Resource

A crucial element or input required for the production process or societal functioning.

Immigration

The action of coming to live permanently in a foreign country.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Consumer Income

Refers to the total earnings received by consumers, including wages, salaries, benefits, and any other income sources, influencing their purchasing power and spending behaviors.