A Stock Is Trading at $20

question 1

Multiple Choice

A stock is trading at $20. A one-month call with a strike of 19 is valued at $1.439 and has a rho of 1.09. An increase in interest rates of 10 basis points changes the call value to, approximately,

• A) 1.440
• B) 1.450
• C) 1.548
• D) 2.529

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Definitions:

Reinforcement

A process in behavior analysis used to increase the likelihood of a desired response by either presenting a rewarding stimulus (positive reinforcement) or removing an adverse stimulus (negative reinforcement).

Continuous Reinforcement

A method of learning in which every correct response is followed by a reward, fostering quick acquisition of a desired behavior.

Simplest

Pertaining to the least complicated or most straightforward version, form, or method of something.

Schedule

A plan that details when certain tasks or activities are to be done, outlining a timeline for events.