18. The binomial option price approaches the Black Scholes price when ____________.

Multiple Choice

A the number of subintervals increases substantially

B the probability of each subinterval is similar to the stocks standard deviation

19. The current market price of Belamore Ltd stock is $64.50 and has an associated call option priced at $10.00 and a strike price of $57.50. This call has an intrinsic value of ______ and a time value of _____.

Multiple Choice

A $7.00; $3.00

B $3.00; $7.00

C $0; $10.00

D $10.00; $0

C the volatility is low

D the interest rate increases