Using the information on Harbin Manufacturing in Problem 19, answer the following: a. Using the risk-neutral probabilities,
Question:
Using the information on Harbin Manufacturing in Problem 19, answer the following:
a. Using the risk-neutral probabilities, what is the value of a one-year call option on Harbin stock with a strike price of $25?
b. What is the expected return of the call option?
c. Using the risk-neutral probabilities, what is the value of a one-year put option on Harbin stock with a strike price of $25?
d. What is the expected return of the put option?
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