The current stock price of KMW is $27, the risk-free rate of return is 4%, and the standard deviation is 30%. What is the price of a 63-day call option with an exercise price of $25?

A) $2.50
B) $2.65
C) $2.89
D) $3.12

Question

Kassu Chathu · Accepted Answer

Final Answer : B, Explanation :d 1  =  1  =   = 0.7352 d 2  = 0.7352 - 0.30 ×   = 0.6106 N(d 1 ) = 0.7689 N(d 2 ) = 0.7293 Call value = $2.65  class=answers-bank-image d-inline rel=preload > = 0.7352d 2  = 0.7352 - 0.30 ×  1  =   = 0.7352 d 2  = 0.7352 - 0.30 ×   = 0.6106 N(d 1 ) = 0.7689 N(d 2 ) = 0.7293 Call value = $2.65  class=answers-bank-image d-inline rel=preload > = 0.6106N(d 1 ) = 0.7689N(d 2 ) = 0.7293Call value = $2.65

The current stock price of KMW is $27, the risk-free rate of return is 4%, and the standard deviation is 30%. What is the price of a 63-day call option with an exercise price of $25?

A) $2.50
B) $2.65
C) $2.89
D) $3.12

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Learning Objectives

Related questions

The current stock price of KMW is $27, the risk-free rate of return is 4%, and the standard deviation is 30%. What is the price of a 63-day call option with an exercise price of $25?A) $2.50B) $2.65C) $2.89D) $3.12

Definitions

Learning Objectives

Learning Objectives

Related questions

The current stock price of KMW is $27, the risk-free rate of return is 4%, and the standard deviation is 30%. What is the price of a 63-day call option with an exercise price of $25?

A) $2.50
B) $2.65
C) $2.89
D) $3.12