Consider a Stock Priced at $30 with a Standard Deviation

question 58

Multiple Choice

Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options) . Use this information to answer questions 1 through 10.
-What is your profit if you buy a call,hold it to expiration and the stock price at expiration is $37?

• A)$700
• B)-$289
• C)$2,711
• D)$411
• E)none of the above

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Definitions:

Sensory Responsiveness

The degree to which an individual reacts to or perceives sensory stimuli from the environment.

Sensory Deprivation

A condition in which an individual receives significantly reduced sensory input, often used in psychological experiments or therapy.

Reflects Light

The process by which light bounces off surfaces.

Brighter

Describes an increase in light intensity or luminance, making an object or light source appear more illuminated.