In one-period binomial tree option pricing model

Assignment Help Financial Management

Reference no: EM131939901

Binomial Option Pricing Case 1:

A stock is currently priced at $39/share and pays no dividends. The periodic risk-free rate of interest is 2%. The up factor of 1.25 and a down factor of 0.8.

Binomial Option Pricing Case 1: In a one-period binomial tree option pricing model, if the chance for the underlying stock price to go down has increased to 95% from 45%, then the theoretical price of a European put option with a strike price of 36 will:

Reference no: EM131939901

Questions Cloud

What is the price today of a two-year : What is the price today of a two-year, default-free security with a face value of $1,000 and an annual coupon rate of 7%? The price is $.

Calculate what is the cost of capital : Assuming this is the first year that a project's cash flows are growing at a constant rate, what is the cost of capital if annual cash flows are currently.

EOQ analysis to confirm the optimum order amount : You project to order 100,000 widgets to sell this year. You do an EOQ analysis to confirm the optimum order amount.

What is the effective financing rate for a firm : Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.055, the spot rate of the NZ$ is $0.58, and the one-year forward rate of the NZ$.

In one-period binomial tree option pricing model : In a one-period binomial tree option pricing model, The theoretical price of a European put option with a strike price of 36 will:

What price will eliminate triangular arbitrage : Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting €0.855/$1.00.

All assets would plot on security market line : In a perfectly efficient market, all assets would plot on the Security Market Line.

How much money woul you have at the end of given years : How much money woul you have at the end of 17 years if you had made the same number of deposits but at the beginning of the year instead of at the end.

Determine the firm optimal cash position : Assuming an annual opportunity cost of 2.5%, a fixed cost per securities transaction of $10, and total annual cash needs for the year of $200,000.

User Account

All Pages