10. According to Kingsley David and Wilbert Moore, some positions are harder to

Question

10. According to Kingsley David and Wilbert Moore, some positions are harder to fill than others because they a. are more functionally important. b require qualities that are naturally rare. c. incite dangerous envy in others. d. lack what they called ''natural prestige.'' e require the exercise of too much power. 11. In contrast to extreme biological theories about human nature. extreme environmental theories state that a. biology sets no limits on human nature. b. biology sets no limits on human behavior. c. everything humans do is the result of cultural, not social. influences. d. everything humans do is the result of social and cultural influences. e. a and b

Explanation / Answer

76.Solution:

The payoff from the put option is $0 if the stock price rises and $25 if the stock price falls. From the binomial pricing model we can create a replicating portfolio with the following two equations:

$0 = ($32 × x) + (1.02 × y)

$25 = ($5 × x) + (1.02 × y)

x = –0.93 shares of stock

y = $29.05 of risk-free bonds

The value of the option is the value of the replicating portfolio:

(–0.93 × $29) + ($29.05) = $2.20

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