The current stock price is $50. The stock price can go up by 10% or go down by 10% in each month for 3 months. The risk-free interest rate is 12%. What will be the price of 3- months European Put option using 3-Step Binominal option pricing model if the strike price of the option is $55? Answer choices: a. $2.34 b. $8.91 c. $5.24 d. $5.00

The current stock price is $50. The stock price can go up by 10% or go down by 10% in each month for 3 months. The risk-free interest rate is 12%. What will be the price of 3- months European Put option using 3-Step Binominal option pricing model if the strike price of the option is $55? Answer choices: a. $2.34 b. $8.91 c. $5.24 d. $5.00

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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Suppose you buy GM put for P3, which matures in two months with a strike price of P60. GM is currently trading at P62.75. If the stock price of GM falls to P57 on the expiration date of the option, the rate of return of your put is at what amount?
Suppose you bought a December British pound call option with an exercise price of $1.3000/£. The option price was $0.02/£. How much is your payoff if the spot price is $1.3500/£ at expiration? $0 $0.03 $0.04 $0.05 $0.06
Consider a two year put options with strike Price sh. 52 on a stick whose current price is sh.50. suppose there is 2 times steps and each step is one year and in each times steps the price move up or down by 20%. Suppose the risk Free rate is 5% . Calculate value of put assuming; A) Europeans options B) American options
6 Call options with an exercise price of $50 and one year to expiration are available. The market price of the underlying stock is currently $42, but this market price is expected to either decrease to $52 or increase to $37 in a year's time. Assume the risk-free rate is 6%. What is the value of the option? (Do not round Intermediate calculations. Round the final answer to 2 decimal places. Omit any commes and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response 2:26:13 W حن Search 96 15 園 16 17 5 CH IA ASUS 180/2 8 19 9 10 O 112 IA Bit St Amanat ENG US 6:03 PM 2024-07-09
Basic information of an American put option: Remaining maturity: two month; risk-free rate: 5% (continuously compounded); the underlying current Price: 50; Annual Volatility: 20%; Final Price: 50. Try to construct a two-phase binary tree to price it
Give typing answer with explanation and conclusion You are considering purchasing a put on a stock with a current price of $33. The exercise price is $35, and the price of the corresponding call option is $3.25. According to the put-call parity theorem, if the risk-free rate of interest is 4% and there are 90 days until expiration, the value of the put should be:
Give typing answer with explanation and conclusion 5. A European call option on Home Depot stock has a strike price of $160 and expires in 0.9 years. Home Depot stock has a current market price of $165.99 and the risk-free rate is 4%. What must be the minimum price of the option?
Suppose ABC's stock price is currently $25. In the next six months it will either fall to $15 or rise to $40. What is the current value of a six-month call option with an exercise price of $20? The six-month risk-free interest rate is 5% (periodic rate). [Use the riskneutral valuation method]A. $20.00 B. $8.57 C. $9.52 D. $13.10
A stock price is currently $51. It is assumed that at the end of six months it will be either $30 or $74. The risk-free interest rate is 1.3% per annum with continuous compounding. The stock doesn't pay dividends. One-step binomial tree is used to value options. What is the value of a six-month European call option with a strike price of $51? Round your final result to the nearest cents and input one number only, without units or percentage sign [%], using the dot [.] to separate decimals. Your Answer: Answer
The following 1-year European call options are available on the stock of Vega International, whose stock is trading at €72.50: Strike Price Call Price (€) (€) 60 8.00 75 3.00 90 2.00 What is the maximum profit realised at maturity from a long butterfly spread created from these call options? Assume a risk-free rate of 5%.
Assume a stock price of $31.18, risk-free rate of 3.6 percent, standard deviation of 44 percent, N(₁) value of .62789, and an N(d₂) value of .54232. What is the value of a three-month call option with a strike price of $30 given the Black-Scholes option pricing model? Question 9 options: $3.38 $3.99 $3.68 $1.76 $3.45
A stock price is currently 40 and has a volatility of 25% and a dividend yield of 2%. the risk-free rate is 7%. what is the value of a european six-month put option with a strike price of 42 using a two-step tree? a. $3.15 b. $3.39 c. $3.67 d. $3.86

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