The Following Prices Are Available for Call and Put Options

question 6

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 12 through 17 about a long straddle constructed using the June 50 options.
-What are the two breakeven stock prices at expiration?

• A)$55.58 and $45.87
• B)$54.13 and $45.87
• C)$55.58 and $44.42
• D)$59.71 and $40.29
• E)none of the above

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Definitions:

Primary Growth

An increase in the length of a plant that occurs at the tips of the shoots and roots due to the activity of apical meristems. Compare with secondary growth.

Horizontal Growth

Increase in size or spread of an organism or structure by expanding outwards, rather than elongating.

Longitudinal Growth

The growth of an organism in length, typically observed in the elongation of bones and roots.

Secondary Growth

An increase in the girth of a plant due to the activity of the vascular cambium and cork cambium; secondary growth results in the production of secondary tissues (i.e., wood and bark).