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a. Option are contracts giving the right, but not the obligation, to buy and sell underlying assets at a fixed price during a specified period.
a. Option are contracts giving the right, but not the obligation, to buy and sell underlying assets at a fixed price during a specified period. The value of any option depends on five factors and one of them is the price of the underlying asset. Discuss any other TWO (2) factors. (8 Marks) b. Consider the following information, use 365 days in a year. From the above information, based on Black-Scholes model, compute: i. the value of call option (8 Marks) ii. the value of put option. (4 Marks)
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