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:

Management Tool

A management tool comprises systems, strategies, or software utilized by organizations to improve efficiency, facilitate decision-making, and support the achievement of business objectives.

Environmental Analysis

The process of evaluating the environmental factors that can impact an organization's operations and performance.

Social Entrepreneurship

The practice of developing, funding, and implementing solutions to social, cultural, or environmental issues.

BCG Analysis

A strategic planning tool that classifies a company's business units or products into four categories based on market share and market growth, guiding resource allocation decisions.