Use the Information for the Question(s)below

Multiple Choice

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.
-The risk-neutral probability of a down state for KD Industries is closest to:

A) 37.5%.
B) 62.5%.
C) 40.0%.
D) 60.0%.