Chapter 13 - Q# 14: A stock price is currently $50. It is known that at the end of 2 months it will be either $53 or $48. The risk-free interest rate is 10.0% per annum with continuous compounding. 1. What is the value of p, that is the probability of stock going up? 2. What is the value of a 2-month European call option with a strike price of $49?

Chapter 13 - Q# 15: A stock price is currently $80. It is known that at the end of 4 months it will be either $75 or $85. The risk-free interest rate is 5.0% per annum with continuous compounding. 3. What is the value of p i.e., the probability of stock going up? 4. What is the value of a 2-month European put option with a strike price of $80? Formulas: u = Su+ So d = SD + So p = (e-rxt - d) (u - d) Co = e-rxt [(p x cu+ (1 - p) x cd] Enter your answers in 4-decimal points

Chapter 13-Q\# 14: A stock price is currently $50. It is known that at the end of 2 months it will be either $53 or $48. The risk-free interest rate is 10.0% per annum with continuous compounding. 1. What is the value of p, that is the probability of stock going up? 2. What is the value of a 2 -month European call option with a strike price of $49 ? Chapter 13-Q\# 15: A stock price is currently $80. It is known that at the end of 4 months it will be either $75 or $85. The risk-free interest rate is 5.0% per annum with continuous compounding. 3. What is the value of p i.e,, the probability of stock going up? 4. What is the value of a 2 -month European put option with a strike price of $80 ? Formulas: udpc0=SuS0=S0S0=(ertd)(ud)=ert[(pcu+(1p)cd] Enter your answers in 4-decimal points