USe the Following Data for a Single-Period Binomial Model to Answer

question 13

Multiple Choice

USe the following data for a single-period binomial model to answer the questions that follow.
YBM's stock price S is $102 today.
- After six months,the stock price can either go up to $115.63212672,or go down to $93.52995844.
- Options mature after T = 6 months and have an exercise price of K =$105.
- The continuously compounded risk-free interest rate r is 5 percent per year.
-Given the above data,suppose that a trader quotes a put price of $5.Then the arbitrage profit that you can make today by trading this call and related securities is:

• A) $0
• B) $0.33
• C) $0.59
• D) $1.54
• E) None of these answers are correct.

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Definitions:

Criminal Case

A legal proceeding brought by the state against an individual or entity accused of violating criminal law.

Miranda Rights

A set of rights that law enforcement officials are required to read to individuals upon arrest, informing them of their rights to silence and legal counsel.

Right to Remain Silent

The legal right of an individual to not answer questions or provide statements during police interrogations or in court, as protected under the Miranda rights.

Confession

A formal statement admitting that one is guilty of a crime.