The Stock Price Is $30

question 6

Multiple Choice

The stock price is $30. The strike price of a three-month European put option is $32. If the put option is priced at $5, and the risk-free rate of interest is 2%, and the stock pays no dividends, then the insurance value of the option is

• A) 1.84
• B) 2.00
• C) 3.16
• D) 4.96

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Definitions:

Insensitive

Lacking awareness or concern for the feelings of others, often resulting in actions or comments that can be hurtful.

Strange Situation

A procedure developed by Mary Ainsworth to measure attachment styles in infants by observing their reactions to separations and reunions with their caregiver.

Unfamiliar Situation

A scenario or environment that is not known or recognized by an individual, often leading to feelings of discomfort or anxiety.

Attachment Style

Patterns of relating to others developed in early childhood that affect relationships throughout life.