FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock trades for $47 per share. A call option on that stock has a strike price of $50 and an expiration date twelve months

A stock trades for $47 per share. A call option on that stock has a strike price of $50 and an expiration date twelve months in the future. The volatility of the stock's returns is 39%, and the risk-free rate is 2%. What is the Black and Scholes value of this option?

The Black and Scholes value of this call option is $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Investing

Fundamentals of Investing

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

12th edition

978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359

More Books

Students also viewed these Finance questions

Question

★★★★★
Feng Company has equity of HK$4,000,000 and net income of HK$680,000. It has a payout ratio of 22% and a return on assets of 16%. How much did Feng pay in cash dividends, and what were its average...

Answered: 1 week ago

Question

★★★★★
Part 1 : Consider the following code / pseudocode . Draw a sequence diagram that represents this code, you should include all / any non - boundary objects ( i . e . , classes ) involved in the code....

Answered: 1 week ago

Question

★★★★★
Let X be a random variable with the Poisson distribution with parameter ????. Show that the rth factorial moment of X, ????(r) = E[X(X 1) (X r + 1)], r 1, is given by ????(r) = ????r.

Answered: 1 week ago

Question

★★★★★
On January 1, Year 6, HD Ltd., a building supply company, JC Ltd., a construction company, and Mr. Saeid, a private investor, signed an agreement to carry out a joint operation under the following...

Answered: 1 week ago

Question

★★★★★
You have purchased 100 units of product X, which has a list price of $13.60 per unit. Because you are a wholesaler, you are granted a trade discount of 19.3%. The cash discount terms are 2/6, n/45....

Answered: 1 week ago

Question

★★★★★
The table shows the electricity rates charged by Easton Utilities in the summer months. (A) Write a piecewise definition of the monthly charge S(x) (in dollars) for a customer who uses x kWh in a...

Answered: 1 week ago

Question

★★★★★
Jerielle Pelley is the front offi ce manager at the 125-room limited-service Best Stay Inn. She also serves as her propertys RM. Jerielle has just taken a call from Lawrence, a friend and the RM at a...

Answered: 1 week ago

Question

★★★★★
The production records of Prince Company for the month of June shows the following: Total Manufacturing Cost Variance P 3,840 U Rate Variance 8,710 F Total material cost variance 2,975 U Total Labor...

Answered: 1 week ago

Question

★★★★★
Based on the facts, what is the primary ethical issue in this case? Who are the stakeholders? What changes could have been made to impact the outcome of this fraud? Research recent developments in...

Answered: 1 week ago

Question

★★★★★
MDM4U EXAM REVIEW 1. Consider the arrangement of the name TISHAN a. How many arrangements are there in total? b. How many begin with N? c. How many begin with a vowel? 2. Consider forming 7 digit...

Answered: 1 week ago

Question

★★★★★
A cake maker has determined that the cost of producing wedding cakes is $61.50 per wedding cake plus $16620 per month in fixed costs. The cake maker sells each wedding cake for $200. Step 4 of 4:...

Answered: 1 week ago

Question

★★★★★
Write a dialogue of what you would say to your sellers when presenting to them your marketing recommendations. 1- Give your recommendations based on maximum market (buyer) reach and appropriate...

Answered: 1 week ago

Question

★★★★★
1. Based on the chapter and the case incident, compile a list of 10 international HR mistakes Fisher has made so far.

Answered: 1 week ago

Question

★★★★★
3. What are some of the issues and caveats the employer and its supervisors should follow when dealing with a visit from the Occupational Safety and Health Administration?

Answered: 1 week ago

Question

★★★★★
3. Why are proactive measures the most appropriate for addressing ergonomic injuries?

Answered: 1 week ago

Previous Question Next Question