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Claire calculates that shares of Huron Investments, currently trading at $72, will either increase to $144 or decrease to $36 in one year with a
Claire calculates that shares of Huron Investments, currently trading at $72, will either increase to $144 or decrease to $36 in one year with a 50/50 probability.
Claire is considering a one year $90.00 call option. The simple interest rate is 8.875%.
The price per share of leveraged stock is $___?___
The hedge ratio is 1/?
The price of the call option should be $___?___per share.
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