Write the current fair value of the american call

Assignment Help Financial Management

Reference no: EM131928535

Interest rates are expressed as annualized rates for the term specified. Report your interest rate answers as fractional numbers like 0.11 for 11% per year.

Q- Consider an American Call and an American Put option on a stock trading at a price of A1. The exercise price of either option is A2 and the time to maturity is A3 months.

The stock's volatility (sigma) is A4 per annum, and the risk-free interest rate is A5 percent per annum, continuously compounded. Use a five step binomial model to find the current fair values of the call and put options.

Write the current fair value of the American Call

Write the current fair value of the American Put

A1=48.94

A2=46.94

A3=18.38

A4=0.8094

A5=6.188

Reference no: EM131928535

Questions Cloud

Find what sales price would have to be charged : Find what sales price would have to be charged to earn a $92,000 target profit assuming the investment in technology is made?

Determine nick and jolenes taxable income and tax liability : Assuming that Nick and Jolene have total allowable itemized. Determine their 2015 taxable income and tax liability based on the projections they gave you.

Complete a depreciation schedule for the alternative methods : Nicole's Getaway Spa purchased a hydrotherapy tub system to add to the wellness programs. Complete a depreciation schedule for each of the alternative methods.

What are the irrs and mirrs of the three projects : Given the discount rate and the future cash flow of each project, what are the IRRs and MIRRs of the three projects for Quark Industries?

Write the current fair value of the american call : Consider an American Call and an American Put option on a stock trading at a price of A1. The exercise price of either option is A2 and the time to maturity is

Prepare a balance sheet for nicoles getaway spa : Nicole Mackisey is thinking of forming her own spa business, Nicole's Getaway Spa (NGS). Prepare a balance sheet for Nicole's Getaway Spa at December 31, 2013.

Calculate the yield using a geometric average : If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now?

What are the monthly payments on the loan : You are interested in getting a Nissin Rogue. You have decided to look into leasing to see how it compares with buying.

What sales price would have to be charged : What sales price would have to be charged to earn a $90,000 target profit assuming the investment in technology is made?

User Account

All Pages