Consider a Merton Black Scholes model with r 0 07, 0 3, T 0 5 years, S(0) 100, and a call option with the strike price K 100 Using the normal distribution table (or an appropriate software program), find the price of the call option, when there are no dividends Repeat this exercise when (a) the div...

With no dividends we get d 1 02711 d 2 00589 Nd 1 06068 Nd 2 05235 C ...

Consider a Merton-Black-Scholes model with r = 0.07, = 0.3, T = 0.5 years, S(0) =

Question:

Consider a Merton-Black-Scholes model with r = 0.07, σ = 0.3, T = 0.5 years, S(0) = 100, and a call option with the K = 100. Using the normal table (or an appropriate software program), find the price of the call option, when there are no dividends. Repeat this exercise when (a) the rate is 3%, (b) the of $3.00 is paid after three months.
Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...