Consider a Stock Priced at $30 with a Standard Deviation

question 50

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.
-If the transaction described in problem 6 is closed out when the option has three months to go and the stock price is at $36,what is the investor's profit?

• A)$600
• B)$311
• C)$889
• D)$229
• E)none of the above

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Definitions:

Incineration

The process of burning waste materials to reduce their volume and mass and sometimes to generate energy, though it can produce harmful emissions.

Incineration

The process of burning waste materials to reduce their volume and mass, and sometimes to generate energy.

Solid-Waste

Waste comprising of non-liquid materials that come from residential, industrial, and commercial sources.

Hazardous-Waste Detoxification

The process of removing or reducing hazardous substances from waste to minimize their impact on health and the environment.