Portfolio Managers Paul Martin and Kevin Krueger Each Manage $1,000,000

Multiple Choice

Portfolio managers Paul Martin and Kevin Krueger each manage $1,000,000 funds.Paul Martin has perfect foresight and the call option value of his perfect foresight is $150,000.Kevin Krueger is an imperfect forecaster and correctly predicts 50% of all bull markets and 70% of all bear markets.The value of Kevin Krueger's imperfect forecasting ability is __________.

A) $30,000
B) $67,500
C) $108,750
D) $217,500