Binomial Pricing: You Are Fortunate Enough to Own a Put

question 8

Multiple Choice

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

• A) 0
• B) 45
• C) 46
• D) 48

Analyze the role of media in shaping and reflecting public opinion.

Understand the mechanisms and credibility of polling in capturing public opinion.

Understand how to utilize Word's features to enhance document editing and composition, including the use of Smart Lookup and Thesaurus.

Identify and apply the correct method to insert and format text elements like headers, bibliographies, footnotes, endnotes, and citations.

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Definitions:

Return on Investment

A metric for assessing the effectiveness or gains of an investment, determined by dividing the net earnings by the investment's expense.

Minimum Return on Investment

The least amount of profit expected from an investment, below which an investment is not considered acceptable.

Investment Turnover

A measure of a company's ability to generate sales from its investment in assets, typically used to assess the efficiency of investment usage.

Profit Margin

A ratio of profitability calculated as net income divided by revenue, showing the percentage of each dollar of revenue that results in net income.