A Call Option on Juniper Corp

question 77

Multiple Choice

A call option on Juniper Corp. stock with an exercise price of $75 and an expiration date 1 year from now is worth $3 today. A put option on Juniper Corp. stock with an exercise price of $75 and an expiration date 1 year from now is worth $2.50 today. The risk-free rate of return is 8%, and Juniper Corp. pays no dividends. The stock should be worth ________ today.

• A) $69.73
• B) $71.69
• C) $73.12
• D) $77.25

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Definitions:

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution.

Chi-square Statistic

A statistical measure used to determine if there is a significant difference between the expected frequencies and the observed frequencies in one or more categories.

Wearing Glasses

The act of using corrective lenses mounted in frames that rest on the face to improve vision or protect the eyes.

Approval Rating

A measure, often expressed as a percentage, indicating the level of public support or approval for a person, policy, or institution.