A Stock Is Currently Trading At $S _ { 0 } = 21.30$

question 10

Multiple Choice

A stock is currently trading at $S _ { 0 } = 21.30$ . It is not expected to pay dividends over the next year. You price a one-month put option on the stock with a strike of $K = 22.50$ using the Black-Scholes model and find the following numbers: $$\begin{array} { r l r l } d _ { 1 } & = - 0.666 & d _ { 2 } & = - 0.738 \\N \left( d _ { 1 } \right) & = 0.253 & N \left( d _ { 2 } \right) & = 0.230\end{array}$$ Given this information, the probability of the put finishing out-of-the-money is

• A) 25.3%
• B) 23.0%
• C) 74.7%
• D) 77.0%

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Definitions:

Ego Preoccupation

An excessive focus on oneself and one's own needs, desires, or image, often at the expense of other considerations or sensitivity to others.

Psychosocial Theory

A theoretical framework that describes human development across the lifespan through the interaction between psychological processes and social relationships.

Ego Integrity

A sense of coherence and wholeness, reflecting on one's life and accepting it as it is, typically achieved in late adulthood.

Ego Transcendence

A psychological state in which individuals overcome the self-centeredness of the ego, often seen in late adult development.