What is the value of the american put today

Assignment Help Finance Basics
Reference no: EM131730165

As an option trader on GM stock, you have collected the following information:

(1) GM stock's current price is S= $100

(2) GM's future prices follow a two-state path with u=1.1052 (in Up state) and d=0.9048 (in Down state) in each period.

(3) The one-period riskfree holding period return is R=1.01.

Consider two American options on GM stock (a Put and a Call), both have a strike price of $110 and 5 periods before expiration.

(a) What is the value of the American Put today?

(b) What is the value of the American Call today?

Reference no: EM131730165

Questions Cloud

Calculation of materials and labor variances : Calculation of Materials and Labor Variances, Fritz Corp. manufactures and sells a single product
What minimum annual interest rate must she earn : What minimum annual interest rate must she earn to reach her goal? (assume that interest is compounded annually)
What is the amount of the interest payment : If a 7%, 10-year, $800,000 bond is issued at face value and interest is paid annually, what is amount of the interest payment at end of the first year period
Discuss effect of sample size on statistical significance : Explain what this problem illustrates about the effect of sample size on statistical significance.
What is the value of the american put today : (a) What is the value of the American Put today? (b) What is the value of the American Call today?
What was the balance in the warranty liability account : Wally's Party Warehouse provides wholesale party equipment and materials to Party Shops. What was the balance in the Warranty Liability account
Determine probability of a correct guess : Minitab can provide power for a variety of situations. Suppose that a test for ESP has four choices, and that the probability of a correct guess by chance.
What is the size of the annual coupon payments : Consider a $1,000 par value bond with an 8% annual coupon that is currently selling for $1,050. The bond pays interest annually.
Discuss an asian animation film : you will discuss an Asian Animation film - Princess Mononoke (Miyazaki Hayao, 1997) ..

Reviews

Write a Review

Finance Basics Questions & Answers

  Compare the total value of miya stock holding

If the analyst believe that the price will fall 25% from the initial price after the split, does Miya experience any gain or loss on the stock?

  What annual payment should carl expect

If Carl paid the same amount for this security as Teresa paid for her bond, what annual payment should Carl expect? Calculate and explain in words all calculations.

  What is the apr earned on the account

You and your spouse recently purchased a 300,000 home with 75,000 down, and financing the rest using a 30-year mortgage with a nominal interest rate of 4.25%. Mortgage payments are made at the end of each month. How much of the first 3 years of mo..

  Determine the market price of stock

The Extreme Reaches Corporation last paid a $1.50 per share annual dividend. The corporation is considering on paying $3.00, $5.00, $7.50, and $10.00 a share over the next four years, respectively.

  Globalization of trade and finance

From the first e-Activity, give your opinion on three (3) outcomes that you believe the US recession has had on developing countries and their ability to trade. Provide specific examples of the recession's effects to support your rationale.

  How would you define beta is it an accurate measure to

how would you define beta? is it an accurate measure to hedge the risk in investments? also how can you reconcile the

  The fixed cost at a manufacturing company are 1000000

the fixed cost at a manufacturing company are 1000000 annually. they sell a product that sells for 8.90 each and has

  As a result it is going to reduce its annual dividend by

1. financial market is expecting a period of intense growth and has decided to retain more of its earnings to help

  What is the contribution margin per occupied room

Average room rates are $110 per night. What is the contribution margin per occupied room? In answering this question, use your variable cost estimate from Part B.

  Beverly and kyle nelson currently insure their cars with

beverly and kyle nelson currently insure their cars with separate companies paying 650 and 575 a year. if they insure

  Determine external financing needed

The most recent financial statements for Dockett, Inc., are shown here (Suppose no income taxes):

  Discrete and continuous probability distributions

Provide some examples of discrete and continuous variables. What attributes of these variables make them discrete and continuous? Why?

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!

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