Calculate how much the current stock price would need

Assignment Help Financial Management

Reference no: EM131997502

A stock is selling today for $80. The stock has an annual volatility of 40 percent and the annual risk-free rate is 12 percent.

a. Calculate the fair price for a 1 year European call option with an exercise price of $95.

b. Calculate how much the current stock price would need to change for the purchaser of the call option to break even in one year

c. Calculate the fair price for a 1 year European put option with an exercise price of $95

d. Calculate how much the current stock price would need to change for the purchaser of the put option to break even in one year

e. Calculate the level of volatility that would make the $95 call option sell for $15. (Use Goal Seek or Solver)

f. Calculate the level of volatility that would make the $95 put option sell for $25. (Use Goal Seek or Solver).

Reference no: EM131997502

Questions Cloud

Prepare the journal entry to record fuzzy monkey investment : nterest is received semiannually on June 30 and December 31. Prepare the journal entry to record Fuzzy Monkey's investment on January 1, 2013

Calculate the present value of growth opportunities : Calculate the P/E ratio of Life Point Hospital Corp. Calculate the present value of growth opportunities.

Presented to washington policy-making elites : Know the tensions and dilemmas this logic has presented to Washington's policy-making elites, and how they have resolved these tensions.

Chalmers johnson concept of blowback : Please explain the concept. Any recent examples of blowback? What does the concept mean, and what do you think about the concept?

Calculate how much the current stock price would need : Calculate the fair price for a 1 year European call option with an exercise price of $95.

What is the most that james can deduct : If James's share of the expense was $50,000, what is the most that James can deduct in 2014

Amendment reduce the power of the states : 1) The Federalist (those supporting the new constitution) waned to eliminated the states. True or false

How much is turnbull manufacturing total cost : Beginning work in process inventory $ 35,000 and Direct labor 180,000. How much is Turnbull Manufacturing's total cost of work in process for the year

How does this view compare with the traditional : How does this view compare with the traditional, biological view of race? What are motivating factors for early Americans to construct race and racial categori

User Account

All Pages