Use the following information to answer the question(s)below.
(Please use a copy of the Cumulative Probabilities for the standard normal distribution for these problems. )
Taggart Transcontinental's stock has a volatility of 25% and a current stock price of $40 per share.Taggart pays no dividends.The risk-free interest rate is 4%.
-The Black-Scholes value of a one-year call option on Taggart stock with a strike price of $50 is closest to:
A)$1.45.
B)$3.15.
C)$4.75.
D)$9.50.

Question

Quizplus · Accepted Answer

The Black-Scholes formula is used to calculate the theoretical price of options. Given the inputs: current stock price ($40), strike price ($50), volatility (25%), risk-free rate (4%), and time to expiration (1 year), the calculated call option price is closest to $1.45.

Use the Following Information to Answer the Question(s)below