The Following Information Is Given About Options on the Stock $\sigma$

question 40

Multiple Choice

The following information is given about options on the stock of a certain company.
S₀ = 23 X = 20
r_c = 0.09 T = 0.5
$\sigma$ ² = 0.15
No dividends are expected.
Use this information to answer questions 1 through 8.
-If we now assume that the stock pays a dividend at a known constant rate of 3.5 percent,what stock price should we use in the model? (Due to differences in rounding your calculations may be slightly different."none of the above" should be selected only if your answer is different by more than 10 cents. )

• A)22.60
• B)19.65
• C)23.00
• D)21.99
• E)none of the above

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Definitions:

Psychophysics

A branch of psychology dealing with the relationship between physical stimuli and their subjective correlates, or perceptions.

Physical Energies

Physical energies refer to the various forms of kinetic and potential energy associated with the motion, position, or structure of physical objects.

Difference Threshold

The minimum difference in stimulation that a person can detect 50% of the time, also known as the "just noticeable difference."

Auditory Convergence

A phenomenon in which sounds from different sources merge into a single perceived auditory event.