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do all 4. Use Black/Scholes formula to calculate the theoretical price of a call given the following info: (15 points) FOLLOW THE DIRECTIONS BELOW TO
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4. Use Black/Scholes formula to calculate the theoretical price of a call given the following info: (15 points) FOLLOW THE DIRECTIONS BELOW TO DETERMINE THE RANDOM VARIABLES THAT YOU WILL USE TO SOLVE THIS PROBLEM. CALCULATING THESE VARIABLES IS PART OF THE PROBLEM. Stock Px3x your age i.e. so if you are 24 then use 72 Exercise Px - Something less than stock px; must be a multiple of 5 Variance - One of your parents age as a decimal (i.e. if your mom is 72 , then 0.72 ) Int Rate - the month you were born (Jan=1,Feb=2, etc ) if Feb then 0.02 Time remaining - number of days till your next birthday. (approximate) a. lns/k b. (r+var/2)x(t) c. Std Dev x (sqrt t) d. d1= e. d2= f. Kxert g. Call Price = Step by Step Solution
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