Consider a Binomial World in Which the Current Stock Price

question 34

Multiple Choice

Consider a binomial world in which the current stock price of 80 can either go up by 10 percent or down by 8 percent.The risk-free rate is 4 percent.Assume a one-period world.Answer questions 12 through 15 about a call with an exercise price of 80.
-What is the theoretical value of the call?

• A)8.00
• B)4.39
• C)5.15
• D)5.36
• E)none of the above

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Definitions:

Organizational Hierarchy

The structured arrangement of roles, responsibilities, and authority within an organization, often depicted in a pyramid shape.

Sensing Component

The sensing component refers to a part of a system or device that detects and responds to some type of input from the physical environment, such as light, heat, motion, moisture, pressure, or any other entity.

Active Listening

A communication technique that requires the listener to fully concentrate, understand, respond, and then remember what is being said.

Nonverbal Cues

Forms of communication without words, such as gestures, facial expressions, and body language, which can convey messages or emotions.