User Account

All Pages

Estimate of the call option value

Assignment Help Finance Basics
Reference no: EM131939930

Question: You are attempting to value a call option with an exercise price of $100 and one year to expiration. The underlying stock pays no dividends, its current price is $100, and you believe it has a 50% chance of increasing to $120 and a 50% chance of decreasing to $80. The risk-free rate rate of interest is 10%. Based upon your assumptions, calculate your estimate of the call option's value using the two-sate stock price method.

Reference no: EM131939930

Questions Cloud

How much should the company be willing to spend : Atlas Transportation is considering installing temperature logger in all its refrigerated trucks for monitoring temperatures during transit.
Manager conducts delta hedge on written put position : A manager conducts a delta hedge on a written put position using the underlying asset can:
How much should the lender be repaid : To maintain the original $6,450,000 purchasing power, how much should the lender be repaid?
What is the most you are willing to pay to buy the annuity : Atlas Insurance wants to sell you an annuity which will pay you $550 per quarter for 20 years. You want to earn a minimum rate of return (APR) of 5.0 percent.
Estimate of the call option value : You are attempting to value a call option with an exercise price of $100 and one year to expiration. The underlying stock pays no dividends.
The company unlevered cost of equity capital : What is the company’s cost of equity capital? What is the company’s unlevered cost of equity capital?
Break-even ebit and leverage : Break-even EBIT and Leverage. Which of the three plans has the highest EPS? The lowest?
Ebit and leverage-calculate earnings per share : EBIT and Leverage. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued.
Compute ratio of GDP per capita of different income groups : Compute the ratio of GDP per capita of the different income groups in year 2010 - Middle- to High-income group and Low- to High-income group

Reviews

Write a Review

Finance Basics Questions & Answers

  What should the nominal interest rates at the central bank

The Minister of Finance for the State of Tranquility has just estimated the expected inflation rate for the coming year at 6.75%. If the real rate for the coming year is 3%, what should the nominal interest rates at the central bank of the State of T..

  What are the 2008 earnings per share

Bullseye's has no preferred stock outstanding and 300,000 shares of common stock outstanding. What are the 2008 earnings per share?

  Suppose tapley inc uses a wacc of 8 for below-average risk

suppose tapley inc. uses a wacc of 8 for below-average risk projects 10 for average-risk projects and 12 for

  Discuss about the aurora radiological services

Aurora Radiological Services is a health care clinic that provides radiological imaging services (such as MRIs, X-rays, and CAT scans) to patients.

  Compute jaedans debt and profitability ratios

Calculate Jaedan's free cash flow. Calculate Jaedan's liquidity. Compute Jaedan's debt and profitability ratios. Calculate Jaedan's market ratios.

  A traded option is available with delta of 06 gamma of 15

a financial institution has the following portfolio of over-the-counter options on sterlingtypepositiondelta of

  What height represents the first quartile

In a survey of men in a certain country (ages 20-29), the mean height was 66.5 inches with a standard deviation of 2.9 inches. a) What height represents the 80th percentile? b) What height represents the first quartile?

  Analyse factors that affect price of an american call option

FIN359 Derivative Securities Assignment. Analyse the factors that affect the price of an American call option. Differentiate between the different actions that you can take when you own an American call option. Substantiate your analysis with real ..

  Discuss the single most important or surprising lesson learn

Identify at least three (3) key concepts that you have learned in this course, and explain how those concepts will help you in your current or future positions.

  Why moral hazard problem received so much attention

Moral Hazard and the Credit Crisis : - Explain why the moral hazard problem received so much attention during the credit crisis.

  Substantial reorganization of the company

For example, a decision to self-audit could require a substantial reorganization of the company. Explain your rationale.

  The discount rate decreases

5. You have estimated the value of a planned project by finding the present value (PV) of all the cash flows from that project. Which of the following would cause the project to look more appealing (have a greater net value)? a. the discount rate de..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd