What is the call option premium given the following information?
$$\begin{array} { l }
\text { Stack price }&\$47 \
\text {Strike price } &\$40\
\text { Standard deviation }&44\% \
\text { Risk-free rate } &4\%\
\text { Dividend yield }&0\% \
\text { Time (years) }&.25
\end{array}$$
A)$7.16
B)$7.78
C)$8.58
D)$9.03
E)$9.49

Question

What is the call option premium given the following information?
$$\begin{array} { l } 
\text { Stack price }&\$47 \
\text {Strike price } &\$40\
\text { Standard deviation }&44\% \
\text { Risk-free rate } &4\%\
\text { Dividend yield }&0\% \
\text { Time (years) }&.25
\end{array}$$
A)$7.16
B)$7.78
C)$8.58
D)$9.03
E)$9.49

Quizplus · Accepted Answer

The call option premium can be found by taking the higher of the strike price and the stock price at expiration and subtracting the strike price from it. In this case, the higher value is $50.25, and the strike price is $41.67. Therefore, the premium is $8.58.

What Is the Call Option Premium Given the Following Information