The Following Prices Are Available for Call and Put Options

question 16

Multiple Choice

The following prices are available for call and put options on a stock priced at $50.The risk-free rate is 6 percent and the volatility is 0.35.The March options have 90 days remaining and the June options have 180 days remaining.The Black-Scholes model was used to obtain the prices.
Use this information to answer questions 1 through 20.Assume that each transaction consists of one contract (for 100 shares) unless otherwise indicated.
Answer questions 10 and 11 about a calendar spread based on the assumption that stock prices are expected to remain fairly constant. Use the June/March 50 call spread. Assume one contract of each.
-What will be the profit if the spread is held 90 days and the stock price is $45?

• A)$36
• B)$20
• C)$558
• D)-$20
• E)none of the above

---

Definitions:

Positive Psychology

A branch of psychology focused on the study of positive human functioning, aiming to discover and promote factors that allow individuals and communities to thrive.

Human Strengths

Positive qualities or virtues that individuals possess, which contribute to their overall well-being, resilience, and personal development.

Social Constructions

Concepts, beliefs, or practices that are created and maintained through social interactions and agreements among people.

Psychological State

A mental condition in which the qualities of a person's mind, at a particular time, influence emotions, behaviors, and thoughts.