Recalculate the value of the option in problem 7, successively substituting one of the changes below while keeping the other parameters a Time to maturity 3 months b Standard deviation 25 percent per year c Exercise price $ 55 d Stock price $ 55 e Interest rate 5 percent Consider each scenario inde...

Recalculate the value of the option in problem 7, successively substituting one of the changes below while

Question:

Recalculate the value of the option in problem 7, successively substituting one of the changes below while keeping the other parameters:
a. Time to = 3 months
b. Standard deviation =25 percent per year
c. Exercise price = $ 55
d. Stock price = $ 55
e. Interest rate = 5 percent
Consider each scenario independently. Confirm that the option value changes in accordance with the prediction of Table 19.1.
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...