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The standard deviation of returns averages28 percent. The options mature in 5 years and the risk-freerate is 2.36 percent. What is the value of e−Rt?

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The value of e⁻ᴿᵗ is 0.8886 for the given the standard deviation of returns averages 28 percent with the options mature in 5 years and the risk-free rate is 2.36 percent.

So, the correct option is option ( C).

Exponential function is characterized by rapid increase (as in size or extent) and an exponential growth rate.

We have given that,

standard deviation of returns averages = 28%

options mature, t = 5 years and

Risk-free rate , R = 2.36 percent.

we have to calculate the value of e−Rt.

Exp(-Rt) = e⁻⁽²·³⁶⁾⁵

use exp(value) function to find the value :

=exp(-5 × 2.36%)

= exp(- 0.118 )

=0.8886

Hence, the the value of e⁻ᴿᵗ is 0.8886.

To learn more about Exponential function, refer:

https://brainly.com/question/9330192?

#SPJ4

Complete question:

I. M. Greedy has been granted options on 500,000 shares. The stock is currently trading at $48 a share and the options are at the money. The standard deviation of returns averages 28 percent. The options mature in 5 years and the risk-free rate is 2.36 percent. What is the value of e-rt?

a) .7087

b) .8476

c) .8886

d) .6087

e) .7952

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