Let S = $100, = 30%, r = 0.08, t = 1, and = 0.

Question:

Let S = $100, σ = 30%, r = 0.08, t = 1, and δ = 0. Suppose the true on the stock is 15%. Set n = 10. Compute European call prices, ∆ and B for strikes of $70, $80, $90, $100, $110, $120, and $130. For each strike, compute the on the option. What effect does the strike have on the option's Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...