The current price of a stock is $18. In 1 year, the price will be either $28 or $15. The annual risk-free rate is 3%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet andperform the required analysis to answer the question below.XOpen spreadsheetFind the price of a call option on the stock that has a strike price is of $23 and that expires in 1 year. (Hint: Use daily compounding.) Assume 365-day year. Do not round intermediate calculations. Round youranswer to the nearest cent.$

Answered: The current price of a stock is $18. In…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You want to price an American Put option that is written on the stock of Shelby Ltd. The price of the stock is £20, the risk-free interest rate is 5%, the annualised volatility of the stock is 42% and the option expires in 5 months. Given that information, calculate the up-multiplier to be used in a nine-step binomial tree. Write your answer in decimal form with up to three decimal points Answer:
Give typing answer with explanation and conclusion The current stock price is $50. It is known that at the end of the next month it will be either $55 or $45. What is the delta of a one-month European put option with a strike price of $47? DO NOT USE CHAT GPT.
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Use the Black-Scholes formula for the following stock: Time to expiration 6 months Standard deviation 42% per year Exercise price $44 Stock price $43 Annual interest rate 2% Dividend 0 Calculate the value of a call option. (Round to 2 decimal places.) Value of a call option ?
A stock sells for $125. A call option on the stock has an exercise price of $110 and expires in 3 months. If the interest rate is 0.15 and the standard deviation of the stock’s return is 0.30. What would be the price of a put option on the same stock with an exercise price of $140 and the same time (3 months) until expiration? Show all workings. (See Appendix for the Cumulative Normal Distribution Table) b) Let the spot rate be Yen 100 / $ and the 3-month forward rate be Yen 99/$. Compute the interest rate differential between the U.S. and Japan at which interest rate parity will hold true.
The current price of a stock is $21. In 1 year, the price will be either $26 or $16. The annual risk-free rate is 5%. Find the price of a call option on the stock that has a strike price of $22 and that expires in 1 year. (Hint: Use daily compounding.) Assume a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.
Assume the following inputs for a call option: (1) current stock price is $23, (2) strike price is $28, (3) time to expiration is 5 months, (4) annualized risk-free rate is 5%, and (5) variance of stock return is 0.3. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Use the Black-Scholes model to find the price for the call option. Do not round intermediate calculations. Round your answer to the nearest cent.
A put option is currently selling for $5.8. It has a strike price of $65 and seven months to maturity. The current stock price is $71. The risk-free rate is 4.8 percent, and the stock will pay a $3.1 dividend in two months. What is the price of a call option with the same strike price? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price of a call option
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Stock returns and your retirement account: Suppose your retirement accounthas a balance today of $25,000 and you are 20 years old. If you are investedin a diversifed portfolio of stocks, you might hope that the historical returnof about 6% continues into the future. Consider how the balance in yourretirement account evolves as you age under the diferent assumptions below.(If you like, use a spreadsheet program to help you with this question.)(a) Compute the balance in your retirement account when you will be 25,30, 40, 50, and 65 years old assuming the average annual rate of return is6%. Assume there are no deposits or withdrawals in this account, so theoriginal balance just accumulates.(b) Do the same thing for rate of return of 5% and 7%. How sensitive is thecalculation to the rate of return?(c) Plot your retirement account balance for these three scenarios (6%, 5%,7%) on a standard scale.(d) Do the same thing with a ratio scale.
The current price of a stock is $20. In 1 year, the price will be either $28 or $15. The annual risk-free rate is 7%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Find the price of a call option on the stock that has a strike price is of $25 and that expires in 1 year. (Hint: Use daily compounding.) Assume 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.

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