You own one call option with an exercise price of $30 on Nadia stock.This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year.The risk-free rate of return is 5 percent.What is the current per share value of your option if it expires in one year?
A)$.76
B)$.79
C)$.89
D)$.92
E)$.95

Question

Quizplus · Accepted Answer

The correct answer is A because the current per share value of the option is $.76. This is calculated using the Black-Scholes model, which takes into account the stock price, the exercise price, the risk-free rate, the time to expiration, and the volatility of the stock.

You Own One Call Option with an Exercise Price of $30