The Following Prices Are Available for Call and Put Options

question 12

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.
For questions 1 through 6,consider a bull money spread using the March 45/50 calls.
-What is the profit if the stock price at expiration is $47?

• A)-$102
• B)$398
• C)-$302
• D)$500
• E)none of the above

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Definitions:

Penfield

Wilder Penfield was a pioneering neurosurgeon and researcher whose stimulation of the human brain cortex led to important discoveries in epilepsy treatment and the mapping of brain functions.

Serial Recall

The cognitive process of retrieving or recalling information from memory in the exact order in which it was presented or learned.

Temporal Associations

The relationship between events in time, often influencing how memories and perceptions are formed.

Recognition

The cognitive process of identifying previously encountered information from an array of options.