Question
A stock is currently priced at $77 and will move up by a factor of 1.50 or down by a factor of .88 over the
A stock is currently priced at $77 and will move up by a factor of 1.50 or down by a factor of .88 over the next period. The risk-free rate of interest is 4.2 percent and the strike price is $78.
a. What is the up price?
b. What is the down price?
c. What is the value of the call option in up price?
d. What is the value of the call option in down price?
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
978-0538453257
