The Current Price of a Stock Is $100

question 19

Multiple Choice

The current price of a stock is $100. Consider the Black-Scholes model price of a six-month call option at strike $101, given an interest rate of 2% and a dividend rate of 1%? The volatility is 25%. What is the risk-neutral probability of the option ending up in the money?

• A) 0.45
• B) 0.48
• C) 0.49
• D) 0.50

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Definitions:

Conformity

The act of aligning one's beliefs, attitudes, and behaviors with those of a group or society's norms and expectations.

Solomon Asch

A psychologist best known for his research on conformity, demonstrating how social pressure can influence individuals to conform to incorrect answers.

Stanley Milgram

A psychologist known for his work on obedience to authority, demonstrating that people are willing to obey authority figures even when it involves harming others.

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms, pressures, or expectations.