rently trading at $55 per share. The stock pays no dividends. The options will expire in 5 years, and the standard deviation of the returns on the stock is 45%. Treasury bills that mature in 4 years currently yield a continuously compounded interest rate of 7%. Use the Black-Scholes model to calculate the value of the  stock option. Use excel and share the formula templat

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
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The board of directors has just granted Mr. Levin at-the-money European call options on the company’s stock., which is currently trading at $55 per share. The stock pays no dividends. The options will expire in 5 years, and the standard deviation of the returns on the stock is 45%. Treasury bills that mature in 4 years currently yield a continuously compounded interest rate of 7%.

Use the Black-Scholes model to calculate the value of the  stock option.

Use excel and share the formula template.

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