Vance and Jared Were Both Recently Hired to Be Program

question 58

Multiple Choice

Vance and Jared were both recently hired to be program directors at an urban university. Vance attended a large, historic university while Jared attended a branch campus of a regional university. Jared is paid 15% more than Vance. The best explanation for this is ________.

• A) Jared is a better negotiator
• B) Vance did not do well in school
• C) Jared's position is worth more to the university
• D) Vance's position is not important to the university
• E) the institution is not competitive within the industry

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Definitions:

Strike Price

In options trading, this is the price at which the holder of the option can buy or sell the underlying asset.

Shares

Units of ownership interest in a corporation or financial asset that provide an equal distribution in any profits, if any are declared, in the form of dividends.

European Options

Financial derivatives that give the holder the right to buy or sell the underlying asset at a specified price only at the expiration date.

Black-Scholes Model

A mathematical model of the market for an equity, in which the price of the equity is modeled as a stochastic process, used primarily to price European style options.