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Discuss the five inputs that are needed for the Black-Scholes estimations and show the relevance of these inputs to investors. b) The current price of
Discuss the five inputs that are needed for the Black-Scholes estimations and show the relevance of these inputs to investors.
b) The current price of Kinston Corporation stock is $10. In each of the next two years, this stock price can either go up by $3.00 or go down by $2.00. Kinston stock pays no dividends. The one year risk-free interest rate is 5% and will remain constant. Using the binomial pricing model, calculate the price of a two-year call option on Kinston stock with a strike price of $9
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