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Assume risk-neutrality. A European call option with a strike price of $20.40 which expires in four months is written over a stock that is currently priced at $20.00. It is known that at the end of four months the stock will be either worth $18 or $22. The risk-free interest rate is 5% p.a. (continuously compounded).
Question i) Verify that the probability of a share price increase is 0.584.
Question ii) Use the risk-neutral valuation method to determine the value of the call option.
Accounting for share issues and options Sunny Ltd is looking to expand its operations, and in order to do this, the company needs to increase equity. On 1 January 2016, Sunny Ltd offered 4,000,000 ordinary shares to the public at an issue price of $3..
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What is the Current Balance in the Dividends Payable account? On August 15, 2019, EasyMoney Inc's Board of Directors meets and declares
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