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

question 1

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 the price of a 100-strike, six-month European call option when a dividend of $1 is paid at the end of each month? (Assume that if the option is exercised, it is done just before a dividend payment.)

• A) $7.20
• B) $7.50
• C) $7.70
• D) $8.20

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Definitions:

Emotion

A complex psychological state involving an individual's subjective experience, physiological response, and expressive behavior.

Myelination

The process in which neurons are coated in a fatty substance, myelin, which contributes to faster neural communication.

Synaptic Pruning

The process by which synapses, neural connections that are seldom used, disappear.

White Matter

Myelinated brain tissue.