The Following Prices Are Available for Call and Put Options

question 12

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.
-What is the profit if the stock price at expiration is $47?

• A)-$102
• B)$398
• C)-$302
• D)$500
• E)none of the above

---

Definitions:

Reckless Indifference

denotes a disregard or lack of concern for the consequences of one's actions, particularly where such actions pose a risk to others.

Tangible Employment Action

A significant change in employment status or benefits, such as occurs when an employee is fired, refused a promotion, or reassigned to a lesser position.

Supervisor's Sexual Harassment

Unwanted sexual advances, requests for sexual favors, or other verbal or physical harassment of a sexual nature made by a supervisor towards a subordinate.

Liable

Legally responsible or obligated to make amends for a loss or damage.