What is the value of the put options

Assignment Help Finance Basics
Reference no: EM132395582

1. What is the value of the following call option according to the Black Scholes Option Pricing Model? What is the value of the put options?

Stock Price = $42.50

Strike Price = $45.00

Time to Expiration = 3 Months = 0.25 years.

Risk-Free Rate = 3.0%.

Stock Return Standard Deviation = 0.45.

2. Draw the payoff picture at expiration for a long position in a call option that has a premium of $1.75 and a strike price of $55.

3. Draw the payoff picture for a short position in the call option given in Problem 2.

4. Draw the payoff picture at expiration for a long position in a put option that has a premium of $2.50 and a strike price of $65.

5. Draw the payoff picture for a short position in the put option given in Problem 4.

Reference no: EM132395582

Questions Cloud

What are the implications of generational diversity : Despite the benefits of diversity, some say it is a "double-edged sword." Explain why? What are the implications of generational diversity on effective.
What strengths do you see in the new system : Do you think the new system is really more objective? What strengths do you see in the new system? What weaknesses do you see in the process?
INF80028 Business Process Management Assignment Problem : INF80028 Business Process Management Assignment Help and Solution, Swinburne University of Technology, Assessment Writing Service - Analysing and Designing
What was the firm 2017 operating cash flow or ocf : What was the firm's 2017 operating cash flow or OCF?
What is the value of the put options : 1. What is the value of the following call option according to the Black Scholes Option Pricing Model? What is the value of the put options?
Calculating fees on a loan commitment : You have approached your local bank for a start-up loan commitment for $1,200,000 needed to open an auto repair store.
Calculating costs of issuing stock : Your company needs to raise $4.10 million to finance plant expansion. In discussions with its investment bank, you learn that the bankers recommend a gross
Expected maximum price in light of the dividend : If the appropriate rate of return on this stock is 12 percent per year, and the stock consistently goes ex-dividend 25 days before dividend payment date
Build the entire amortization table : Suppose you move to a new city and sell the house in 8 years. How much do you still owe on the mortgage when you sell the home?

Reviews

Write a Review

Finance Basics Questions & Answers

  Discuss the problem related to new equipment

A project has an initial requirement of $235,771 for new equipment and $10,621 for net working capital. The installation costs are expected to be $15,302.

  Find new value of the portfolio

Suppose you are planning how to invest part of your retirement savings. You have decided to put $200,000 into three stocks: 50 percent of the money in GoldFinger.

  What are your recommendations for the three projects

The Question : (A) Assuming a budget of $1,300,000 what are your recommendations for the three projects in the above problem. Explain.(B) Assuming a budget of $2,100,000 what are your recommendations for the above problem? Explain.

  Evaluate sensitivity analysis for different financial models

Analyze and evaluate sensitivity analysis for different financial models, including the Yield Curve and its usefulness in predicting recessions

  What is the wacc for a companys with after tax cost of

what is the wacc for a companys with after tax cost of equity preffered debt equal to 16 9 5 if equity makes up 30

  One year ago you purchased a stock at a price of 3349 the

one year ago you purchased a stock at a price of 33.49. the stock pays quarterly dividends of 0.20 per share. today the

  Optimal asking rent to maximize the landlord present value

(Modeling Optimal Landlord Search) Use the procedure described in Appendix 30C of this chapter contained on the CD to answer this question.

  What is the net income of company

Net Income and OCF. During the year, Belyk Paving Co. had sales of $2,350,000. Cost of goods sold, administrative and selling expenses, and depreciation.

  An urn contains 3 green balls 2 blue balls and 4 red balls

an urn contains 3 green balls 2 blue balls and 4 red balls. in a random sample of 5 balls find the probability that

  What was their net working capital (nwc) for the year

Create a personal balance sheet as of December 31, 2012. It should be similar to a corporate balance sheet. What must the total assets of the Adams family be equal to by December 31, 2012? What was their net working capital (NWC) for theyear?

  What is the effective annual rate on this arrangement

A firm sells its $1,170,000 receivables to a factor for $1,134,900. The average collection period is 1 month. What is the effective annual rate on this arrangement?

  Complete the balance sheet and sales information in the

complete the balance sheet and sales information in the table that follows for hoffmeister industriesusing the

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