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For all questions below assume time discount rate of zero. Q1 is for DISCRETE multi-nomial distribution. Q1. You believe stock price by year end will
For all questions below assume time discount rate of zero. Q1 is for DISCRETE multi-nomial distribution. Q1. You believe stock price by year end will have the following multinomial distribution: Price Probability 80 10% 90 20% 100 40% 110 0% 120 10% Q1a. What should be the stock price TODAY? Q1b. what is the prob that a 95 strike put will expire ITM? Q1c. what is the conditional average price of underlying stock when 95 strike put expire ITM? Q1d, based on Q1b and Q1c, how much should the 95 put be priced at? Q1e. redo Q1b-d for 95 call
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Fundamentals Of Corporate Finance
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
5th Edition
1119795435, 978-1119795438
