A Stock Priced at 50 Can Go Up or Down

question 14

Multiple Choice

A stock priced at 50 can go up or down by 10 percent over two periods.The risk-free rate is 4 percent.Which of the following is the correct price of an American put with an exercise price of 55?

• A)7.88
• B)3.38
• C)4.00
• D)5.00
• E)1.65

---

Definitions:

Ventricular Fibrillation

A life-threatening heart rhythm that results in a rapid, erratic heartbeat, preventing the heart from pumping blood effectively.

Electrical Impulse

A rapid surge of electrical energy that travels through neurons, facilitating nerve signaling in the body.

AV Node

The atrioventricular node, a critical component of the heart's electrical system responsible for regulating the timing of heart beats.

Bundle of His

A collection of heart muscle cells specialized for electrical conduction that transmits the electrical impulses from the AV node to the point of the apex.