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- The current stock price of Johnson & Johnson (J&J) is $56, and the stock does not pay dividends. The instantaneous risk-free rate of return is 6%. The instantaneous standard deviation of J&J's stock is 25%. You want to purchase a put option on this stock with an exercise price of $50 and an expiration date 70 days from now. Assume 365 days in a year Using Black - Scholes, the put option should be worth today. Multiple Choice $0.36 $6.94 $6.58 $0.29Suppose XYZ stock pays no dividends and has a current price of $50. The forward price for delivery in 1 year is $55. Suppose the 1-year eective annual interest rate is 10%. (a) Graph the payo and prot diagrams for a forward contract on XYZ stock with a forward price of $55. (b) Is there any advantage to investing in the stock or the forward contract? Why? (c) Suppose XYZ paid a dividend of $2 per year and everything else stayed the same. Now is there any advantage to investing in the stock or the forward contract? Why?Shopify, Inc common stock currently sells for $1,229.91 per share, and the standard deviation of returns is 58.67%. A call option with a strike price of $1,100 is currently trading on the market. The option expires in 0.15 years, and the risk-free rate of return is 0.9%. Shopify does not pay a dividend. What is rho (ρ) for this call option assuming a continuous model such as the Black-Scholes model? A) 104.1327 B) 107.2895 C) 57.7772 D) 107.0002
- The current price of a non-dividend-paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk-free rate is zero. What is the initial value of the call option? Choose the right answer: a. $2 b. $3 c. $1.6 d. $2.4Shopify, Inc common stock currently sells for $1,185.31 per share, and the standard deviation of returns is 68.35%. A put option with a strike price of $1,100 is currently trading on the market. The option expires in 0.15 years, and the risk-free rate of return is 4.3%. Shopify does not pay a dividend. What is rho (p) for this put option assuming a continuous model such as the Black-Scholes model? O 94.5148 O 93.8567 O 93.3034 O 70.6357The current stock price of Alcoco is $60, and the stock does not pay dividends. The instantaneous risk-free rate of return is 6%. The instantaneous standard deviation of Alcoco's stock is 40%. You want to purchase a call option on this stock with an exercise price of $65 and an expiration date 30 days from now. Based on the Black-Scholes OPM, the call option's delta will be A. B. 0.32 0.25 0.60 0.28
- XYZ Corp. will pay a $2 per share dividend in 2 months. Its stock price currently is $72 per share. A call option on XYZ has an exercise price of $65 and 3-month time to expiration. The risk-free interest rate is 0.3% per month, and the stock's volatility (standard deviation) = 12% per month. Find the pseudo-American option value. (Hint: Try defining one "period" as a month, rather than as a year.) (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Pseudo-American option valueSuppose that the current price of Roblox Corporation common stock is (RBLX) is $100. If the price of RBLX will be either $150 or $50 one year from now, what is the price of a call option with a strike price of $120 expiring one year from now? Assume that the current risk free rate is 1%. What is the risk neutral probability of the stock being $150 one year from now?AMZN shares currently sell for 775. The stock pays no dividend. The current risk-free rate is 1.50% compounded continuously. You believe AMZN European options, with a strike price of 780, maturing in 24 trading days, should be selling for an implied volatility of 21%. (Assume there are 252 trading days in a calendar year.) What is the value for d₂ for this option as defined by the Black-Scholes Merton model (BSM model)? O d₂ < -0.05 -0.05 ≤ d₂ <-0.04 -0.04 ≤ d₂ <-0.03 -0.03 ≤ d₂ <-0.02 -0.02 ≤ d₂
- Suppose a zero dividend payment stock is selling for K48 per share.The standard deviation of the return on this stock is 25%.The risk free rate is 8%.The option has a strike price of K50.For a 6 month call option on this stock,find; D1 and D2 N(d1) and N(d2) Value of the call option and Value of the put optionA.K. Scott’s stock is selling for $37 a share. A 3-month call on this stock with a strike price of $38 is priced at $2. Risk-free assets are currently returning 0.28 percent per month. a) What should be the price of a 3-month put option on this stock with a strike price of $38? b) Which of the two options is currently in the money and does that accord with your conclusions about their relative prices?The common stock of Triangular File Company is selling at $91. A 13-week call option written on Triangular File's stock is selling for $9. The call's exercise price is $101. The risk-free interest rate is 8% per year. a. Suppose that puts on Triangular stock are not traded, but you want to buy one. Which combination will produce the same results? Buy call, invest PV(EX), sell stock short Sell call, invest PV(EX), sell stock short Buy call, lend PV(EX), buy stock Sell call, lend PV(EX), buy stock b. Suppose that puts are traded. What should a 13-week put with an exercise price of $101 sell for? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Put option price