4. You have been offered the chance to purchase stock in a firm. The seller wants $55...

Question:

4. You have been offered the chance to purchase stock in a firm. The seller wants $55 per share, but offers to repurchase the stock at the end of one-half year for $50 per share. If the σ of the share's log returns is 80 percent, determine the true value per share. Assume that the interest rate is 10 percent.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Modeling

ISBN: 9780262024822

2nd Edition

Authors: Simon Benninga

Question Posted: