Katrina Is Analyzing an Expansion Project for a New Business

Multiple Choice

Katrina is analyzing an expansion project for a new business and has developed this input for a Black-Scholes model.Stock price = $4,186,300,exercise price = $7,250,000,time period = 4 years,standard deviation = 13.8 percent,and the continuously compounded interest rate = 3.84 percent.What is the value of d₂ as it is used in the model?

A) .01338
B) 1.2784
C) 1.2953
D) −1.5713
E) −1.0293