The Current Price of a Stock Is $22, and at the End

question 13

Multiple Choice

The current price of a stock is $22, and at the end of one year its price will be either $27 or $17.The annual risk-free rate is 6.0%, based on daily compounding.A 1-year call option on the stock, with an exercise price of $22, is available.Based on the binomial model, what is the option's value? (Hint: Use daily compounding.)

• A) $2.43
• B) $2.70
• C) $2.99
• D) $3.29
• E) $3.62

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Definitions:

Hygiene Measures

Practices and behaviors that aim to maintain health and prevent the spread of diseases, including hand washing, disinfection, and personal cleanliness.

Patient Confidentiality

The ethical and legal duty of healthcare professionals to protect patient information from unauthorized disclosure.

Faxing

The process of sending and receiving documents via a telephone line using a device known as a fax machine.

Medical Record

A comprehensive document containing a patient's health history, including diagnoses, medications, treatment plans, and outcomes.