A call option is an agreement that

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Reference no: EM131828979

1. The continuously compounded annual return on a stock is normally distributed with a mean of 26% and standard deviation of 30%. With 95.44% confidence, we should expect its actual return in any particular year to be between which pair of values? Hint: Refer to Figure 5.3.

a. −34.0% and 86.0%

b. −14.0% and 86.0%

c. −64.0% and 116.0%

d. −4.0% and 56.0%

2. A call option is an agreement that:

A) grants the seller the right but not obligation to sell a security at a predetermined price.

B) gives the buyer the right to purchase a stock of Tiffany, Inc. at some point in the future at a predetermined price.

C) Set up a predetermined price but not a time period of the future transaction.

D) is the obligation for both the buyer and seller to complete a future transaction.

Reference no: EM131828979

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