User Account

All Pages

What is the fair price of this call option

Assignment Help Finance Basics
Reference no: EM132641693

Consider a 1-period BOPM where a period is 1 year. The current stock price is 40. The stock could up by 20% (u=1.2) or down by 10% (0.9) and the risk-free rate is 8%. The strike price of a call option is 45. What is the hedge ratio?

Consider a 1-period BOPM where a period is 1 year. The current stock price is 40. The stock could up by 20% (u=1.2) or down by 10% (d=.9) and the risk-free rate is 8%. The strike price of a call option is 45. What is the fair price of this call option?

Reference no: EM132641693

Questions Cloud

What is mary effective annual rate : She sold all stocks today for $42.25. During that period the stock paid dividends of $2.81 per share. What is Mary's effective annual rate?
Identify an evaluation process for the intervention plan : Identify an evaluation process for the intervention plan. Specifically, explain how you will gauge the success of the plan. Your paper should meet the.
Intelligence collection efforts of the soviet union : During Cold War, U.S. counterintelligence (CI) mission was clearly defined: It focused on countering the intelligence collection efforts of the Soviet Union
Would tany crime tomorrow if criminal laws were repealed : American Criminalogical Thinking by Clarence R. Jeffery. This article examined the question of "Would there be any crime tomorrow if criminal laws repealed
What is the fair price of this call option : Consider a 1-period BOPM where a period is 1 year. The current stock price is 40. The stock could up by 20% (u=1.2) or down by 10% (0.9) and the risk-free rate
Analyze qualities and skills of a highly effective leader : Write a 4-5 page (not including title and reference page) paper surrounding the topic of leadership theories, management principles, qualities and skills.
Community explaining the restorative justice process : Write a paper to the community explaining the restorative justice process. Explain how the damage of a crime can go beyond the immediate victim.
Differentiate between felony and misdemeanor : Differentiate between a felony and misdemeanor. List the five purposes of the presentence investigation.
What is the future value of the money : 1. If you deposit $10,000 in a bank that pays 10% interest annually, how much money will be in your account after five years?

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe the three types of project risk

Describe the three types of project risk. Under what situation in each of the types most relevant to the capital budgeting decision.

  Innovation proposal affect noble bicycles

Question: How does the innovation proposal affect Noble Bicycles and why?

  Net inflows and outflows of foreign currency

Subsidiary A of Mega Corporation has net inflows in Australian dollars of A$1,000,000, while Subsidiary B has net outflows in Australian dollars of A$1,500,000.

  Fair price per share

What is a fair price per share and how many additional shares must Benjamin sell to the angel? Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant.

  Identify an economic crisis or turning point

Identify an economic crisis or turning point that had a significant impact on certain industries in the U.S. Explain why investing in international markets.

  Determine the correct amounts for net income total assets

at the end of october the first month of operations the following selected data were taken from the financial

  How is eva used to value a common stock

How is EVA used to value a common stock?

  What is the geometric mean return for investment

1. You invest $250 in a stock. Exactly two years later you are able to sell the investment for $300 cash.

  What is the common-size percentage for the net fixed assets

A firm has inventory of $11,400, accounts payable of $9,800, cash of $850, net fixed assets of $12,150, long-term debt of $9,500, accounts receivable of $6,600, and total equity of $11,700. What is the common-size percentage for the net fixed asse..

  What are the total expenses for 2012

What are the total expenses for 2012

  How many shares must be sold to achieve the desired net

Out-of-pocket and underwriting costs are $250,000. How many shares must be sold to achieve the desired net to the issuing firm?

  Review problem on two financing alternatives

A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 40% of sales, while fixed cost will be $450,000.

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