The Current Price of a Stock Is $50

question 24

Multiple Choice

The current price of a stock is $50. Every month, the stock price will rise by a factor of 1.2 or fall by a factor of 0.8; and a $1 risk-free investment will be worth $1.03. Dividends are paid as a proportion of the stock price. Which of the following $51-strike, six-month options has the highest value?

• A) An American put when the stock pays no dividends.
• B) A European put when the stock pays dividends at proportion 0.01 of the stock price.
• C) An American call when the stock pays no dividends.
• D) A European call when the stock pays dividends at proportion 0.01 of the stock price.

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Definitions:

Subordinate Performance

Refers to the output or work-productivity levels of employees who report directly to a manager or supervisor.

Transformational Leadership

A leadership approach that inspires and motivates followers to exceed expectations and achieve extraordinary outcomes through visionary change.

Preferences

This refers to one's likes, dislikes, and inclinations toward certain choices or decisions over others.

Ethics

A branch of philosophy that deals with questions about morality, principles, and the concepts of right and wrong conduct.