Use the information for the question(s) below.
The current price of KD Industries' stock is $20. In the next year the stock price will either go up by 20% or go down by 20%. KD pays no dividends. The one year risk-free rate is 5% and will remain constant.
-Assuming the beta on KD stock is 1.1,the calculated beta for a one-year call option on KD stock with a strike price of $20 is closest to:
A) -1.8
B) 2.4
C) -7.7
D) 4.6

Question

Quizplus · Accepted Answer

D) D = 11ea7e5a_6e86_dd7e_9a0a_bd01dff4a2b4_TB1623_11 = 11ea7e5a_6e86_dd7f_9a0a_39173ce2222f_TB1623_11 = .5 B = 11ea7e5a_6e86_dd80_9a0a_99596379c161_TB1623_11 = 11ea7e5a_6e86_dd81_9a0a_edff78acf821_TB1623_11 = -7.619048 b_option = 11ea7e5a_6e86_dd82_9a0a_8bbe67ae5505_TB1623_11 b_S = 11ea7e5a_6e87_0493_9a0a_43273f9a5c9c_TB1623_11 (1.1) = 4.62

Use the Information for the Question(s) Below