Assume That the Stock of DiezEight, Inc

question 7

Multiple Choice

Assume that the stock of DiezEight, Inc., is currently trading for $16 and will either rise to $50 or fall to $2 in one year. The risk-free rate for one year is 8 percent. You own a portfolio that consists of one call option and one put option. Both options have a strike price of $15, and both expire in one year. What is the value of your portfolio? (Do not round intermediate computations. Round final answer to two decimal places.)

• A) $0
• B) $15.64
• C) $21.40
• D) $18.52

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Definitions:

Recognition

The cognitive process of identifying and acknowledging something as having been previously seen, heard, known, or experienced.

Recall

The act of retrieving information or events from the past in the absence of an explicit cue.

Recall

The mental process of retrieving information or events from the past without the help of cues.

Mnemonist

A Mnemonist is an individual with the ability to remember and recall unusually large amounts of information, often in great detail.