Value of six-month european call option with strike price

Assignment Help Financial Management

Reference no: EM13946791

A futures price is currently 100. At the end of six months it will be either 112 or 90. The risk-free interest rate is 5% per annum. What is the value of a six-month European call option with a strike price of 100?

Reference no: EM13946791

Questions Cloud

Find expected rate of return on market-market risk premium : Stock A has a beta of .6, and investors expect it to return 5%. Stock B has a beta of 1.4, and investors expect it to return 7%. Use the CAPM to find the expected rate of return on market and the market risk premium.

Is equity financing superior to debt financing : Is equity financing superior to debt financing? Does it better serve the objectives of Shariah? Discuss the ways by which the Islamic finance industry can reduce its current reliance on the debt market and increase its proportion of the equity market..

What are inherent issues pertaining to dividend purification : Despite the innovative developments in Shariah screening of mixed businesses, some scholars have argued in favour of "purification" as a complementary measure that should go with stock-screening. What are the inherent issues pertaining to dividend pu..

Fundamental analysis or technical analysis : When valuing stocks (and in particular, deciding what stocks to buy and at what price), two basic methodologies can be employed- fundamental analysis and technical analysis. In relation to investments in equity, argue from a Shari'ah perspective, whi..

Value of six-month european call option with strike price : A futures price is currently 100. At the end of six months it will be either 112 or 90. The risk-free interest rate is 5% per annum. What is the value of a six-month European call option with a strike price of 100?

Find the estimated total costs for a production level : Total cost were $71,700 when 28,000 units were produced and $93,100 when 35,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.

Activity-based costing system with three activity cost pools : Aberdeen Corp. uses activity-based costing system with three activity cost pools. The following information is provided: Costs: Wages and salaries $ 211,000 Depreciation 115,000 Utilities 120,000 Total $440,000 Activity Cost Pools Assembly Setting Up..

What is the actual annual interest rate you will pay : You take out a 3-year, $6,000 loan at 7% interest with monthly payments. The lender charges you a $100 fee that can be paid off, interest free, in equal monthly installments over the life of the loan. Thinking of the fee as additional interest, what ..

Rate of return on high value mutual fund-market portfolio : Suppose that securities are priced according to the CAPM. You have forecast the correlation coefficient between the rate of return on the High Value Mutual Fund (HVMF) and the market portfolio (M) at 0.8. Your forecasts of the standard deviations of ..

User Account

All Pages