Binomial Pricing: Assume That the Stock of ABC, Inc

question 53

Multiple Choice

Binomial pricing: Assume that the stock of ABC, Inc., is currently trading for $21 and will either rise to $30 or fall to $18 in one year. The risk-free rate for one year is 0 percent. You own a portfolio that consists of one call option and one put option. Both options have a strike price of $25, and both expire in one year. What is the value of your portfolio?

• A) $0
• B) $25.00
• C) $6.00
• D) $6.50

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Definitions:

Direct Pathways

Neural pathways that convey impulses directly from one area to another, typically facilitating quick and specific responses or actions.

Indirect Pathways

Indirect pathways refer to neural circuits that communicate through multiple synaptic connections, often modulating or inhibiting the primary signal.

Basal Ganglia

A group of nuclei in the brain involved in the control of movement, as well as aspects of learning, emotion, and the rewarding effects of substances.

Deafferentation

Refers to the loss or interruption of the afferent connections of nerve cells, preventing sensory information from reaching parts of the brain.