Binomial Pricing: You Are Fortunate Enough to Own a Put

question 86

Multiple Choice

Binomial pricing: You are fortunate enough to own a put option with a strike price of $50 on the shares of Good Health Foods. The current share price is $4. When the option expires, you expect the share price to be either $2 or $5. The risk-free rate of interest is zero. What is the value of your option?

• A) You would not exercise this option.
• B) $45
• C) $46
• D) $48

Recognize the need for continuous improvement in both product and service quality.

Understand the importance of data and feedback in TQM practices.

Distinguish between different control types and their applications in TQM.

Understand the implications of quality management practices on organizational culture.

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Definitions:

Teresa of Avila

A significant figure in Christian mysticism and the Catholic Reformation of the 16th century, known for her writings on the contemplative life and spiritual growth.

St. Vincent de Paul

A Catholic voluntary organization dedicated to the service of the poor, established by Frederic Ozanam and named after the saint known for his charity.

Psychopathology

The study of mental disorders and abnormalities, including their symptoms, causes, and treatments.

Four Humours

A historical medical theory postulating that health and temperament depend on the balance of blood, phlegm, yellow bile, and black bile in the body.