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If the spot price is 86.5BDT/US$ and the 3 months European put option exercise price is 87.75BDT/US$. If our interest rate is 9% and U.S. interest rate is 3% and given the volatility σ is 18.1%, what should be the price of this European put option?
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- You are considering a European put option and a European call option on ABC Ltd and have available the following information. The put option with an exercise price of $15 and time to maturity of 60 days is priced at $2.00. The call option with the same exercise price and time to maturity is priced at $3.00. The underlying asset price is $15. The risk-free rate is 2% per 60 days. Could an arbitrage profit be earned? If so, how much the arbitrage profit is? Show your works (Hint: use discrete put-call parity equation and consider two scenarios for stock price at maturity of the options: $10 or $20).Assume the spot Swiss franc is $0.7085 and the six-month forward rate is $0.7120. What is the Value of a six-month call and a put option with a strike price of $0.6885 should sell for in a rational market? Assume the annualized six-month Eurodollar rate is 3.50 percent. Assume the annualized volatility of the Swiss franc is 14.20 percent. Use the European option-pricing models to value the call and put option.What is the implied volatility of a European call option with the following parameters? c = $3 s0 = $40 k = 41 r = 10% T = 0.5 years (Enter 11.51% as 0.1151. Required precision +/- 0.0002)
- Assume the spot Swiss franc is $0.7015 and the six-month forward rate is $0.6980. What is the Value of a six-month call and a put option with a strike price of $0.6815 should sell for in a rational market? Assume the annualized six-month Eurodollar rate is 3.50 percent. Assume the annualized volatility of the Swiss franc is 14.20 percent. Use the European option-pricing models to value the call and put option. This problem can be solved using the FXOPM.xls spreadsheet. (Do not round intermediate calculations. Round your answers to 2 decimal places.)Assume the spot Swiss franc is $0.7045 and the six-month forward rate is $0.7040. What is the Value of a six-month call and a put option with a strike price of $0.6845 should sell for in a rational market? Assume the annualized six-month Eurodollar rate is 3.50 percent. Assume the annualized volatility of the Swiss franc is 14.20 percent. Use the European option-pricing models to value the call and put option. This problem can be solved using the FXOPM.xls spreadsheet. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Option Call Put Value cents centsSuppose a European call option to buy 1 euro for 1.40 CAD costs 0.08 CAD. The option maturity is in two months and the forward exchange rate for the same maturity is 1.50 CAD per euro. What arbitrage opportunity exists? Explain how you can exploit this opportunity and how much the profit is. (Ignore the time value of money)
- The risk-fee rate is 5% per period and a (non- income paying) security has a current price of £300. In one period the price will either rise to £360 or fall to £240. A one-period European put option exists with a strike price of £325. A second one-period European put option exists with a strike price of £315. Which put would you expect to have the greater price. Select one: a. Their prices should be equal b. The £315 put c. We do not have enough information to tell d. The £325 putAssume that the price of a forward contract is 127.87. The European options on the forward contract has an exercise price $150, expiring in 60 days. 3.75% is the continuously compounded risk-free rate, and volatility is 0.33. Using the Black-Scholes-Merton model, compute the price of a put option on the underlying asset.Assume that the price of a forward contract is 127.87. The European options on the forward contract has an exercise price $150, expiring in 60 days. 3.75% is the continuously compounded risk-free rate, and volatility is 0.33. Using the Black model, calculate the price of a put option on a forward contract.
- Consider a European Call Option with a strike of 82. The current price of the underlying asset is 80, and the time to expiry is 5 months. The current market price of the option is 6.22. The risk-free rate is 4.1%. (b) You believe the true volatility is 28.4%. Is the option under-priced or overpriced? Hence what position should you take in option to make money. Explain. (Please provide Screenshots.)4. Assume the following: The spot rate for the euro is $1.15 a. A call option is available with an exercise price of $1.17 and a premium of $0.02 per unit. Expectation of euro's spot rate as of the settlement date is $1.20 What could you do to profit from your expectations? b. The euro is worth $1.15, and the Canadian dollar is worth $0.60. What is the value of the euro in Canadian dollars?Assume the spot Swiss franc is $0.7015 and the six-month forward rate is $0.6980. What is the Value of a six-month call option with a strike price of $0.6815 should sell for in a rational market? Assume the annualized six-month Eurodollar rate is 3.50 percent. Assume the annualized volatility of the Swiss franc is 14.20 percent. Use the binomial option-pricing model to value the call option. (Do not round intermediate calculations. Round your answer to 2 decimal places. Enter your answer in cents per Swiss Franc.) Value of call option cents per SF