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You have the following information about Learn More Inc.'s stock and a two-month call option with a strike price of $62.40. Learn More Inc.'s current

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You have the following information about Learn More Inc.'s stock and a two-month call option with a strike price of $62.40. Learn More Inc.'s current stock price is $48.00. You are using the multiperiod binomial option pricing model to find the value of the two-month option with two periods. II. and IId values given here apply to any period. Data Collected for Learn More Inc. 1.1383 d II. 0.4592 0.4525 0.1723 You work with a junior analyst to calculate the value of the option, and she submits her inferences to you. Which of the following points are true in the case of Learn More Inc.'s stock options? Check all that apply. The value of the one-month call option with a strike price of $62.40 at the end of one month will be $0.00 The value of the call option will always remain $0.00, Irrespective of the time until expiration. Learn More Inc.'s stock price after one month likely will be $54.64 if the stock goes up by a factor of 1.1383 The option payoff if the stock goes up in one month will be $0.00 The value of an option can be calculated by using a step-by-step approach in the case of single periods or by using sophisticated formulas that can be easily created through a spreadsheet. In the real world, two possible outcomes for a stock price in six months is an assumption. The stock markets are volatile, and stocks move up and down based on market and firm-specific factors. Use the following formula to calculate the value of any call option within the same time period. To use the formula for different call options, you can solve this formula with algebra or program it into a spreadsheet. V har Based on your understanding of the binomial option pricing model, is the following statement true or faise? II. and I sometimes called primitive securities, represent variables that impact the value of an option but which also depend on the stock process factors u and d, the risk free rate, the time until expiration, and the number of periods until expiration False True

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