A Stock Is Currently Trading at $100 $u = 1.10$ Or Fall by a Factor Of

question 26

Multiple Choice

A stock is currently trading at $100. In each month, the stock will either increase in price by a factor of $u = 1.10$ or fall by a factor of $d = 0.90$ . The risk-free rate of interest per month is 0.1668% in simple terms, i.e., an investment of $1 at the risk-free rate returns $1.001668 after one month. What is

• A) $7.20 and $5.41, respectively.
• B)$7.20 and $5.08, respectively.
• C) $5.08 and $7.70, respectively.
• D) $5.41 and $7.20, respectively.

---

Definitions:

Biologic Brothers

Male siblings who share the same biological parents.

Family History

Information about diseases or health conditions present in a person's relatives, which can be significant for assessing genetic risks.

Early Development

The initial stages of growth and development in humans and other organisms, often focusing on the prenatal, infancy, and early childhood periods, crucial for physical, cognitive, and emotional health.

Intrapersonal Life

Pertains to personal, internal processes and characteristics within an individual, such as thoughts, feelings, and self-reflection.