The Current Stock Price of Howard & Howard Is $64

question 41

Multiple Choice

The current stock price of Howard & Howard is $64, and the stock does not pay dividends. The instantaneous risk-free rate of return is 5%. The instantaneous standard deviation of H&H's stock is 20%. You want to purchase a put option on this stock with an exercise price of $55 and an expiration date 73 days from now.
Using Black-Scholes, the put option should be worth ________ today.

• A) $0.01
• B) $0.07
• C) $9.26
• D) $9.62

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Definitions:

Trenton

Trenton is the capital city of New Jersey, United States, known historically for the Battle of Trenton during the American Revolutionary War.

Interior Indian Tribes

Indigenous tribes that historically inhabited the inland areas of the United States, often distinguished from coastal or border tribes with different cultural and economic practices.

British-American Conflict

generally refers to the series of disputes and battles between the British Empire and its American colonies, culminating in the American Revolution of 1775-1783.