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Let S = $49, s = 20%, and r = 6.5% (continuously compounded). The stock is set to pay a single dividend of $1.40 nine
Let S = $49, s = 20%, and r = 6.5% (continuously compounded). The stock is set to pay a single dividend of $1.40 nine months from today, with no further dividends expected this year. Use the Black-Scholes model (adjusted for the dividend) to compute the value of a one-year $50-strike European call option on the stock. Answers: a. $3.98 Correctb. $4.19 c. $3.37 d. $2.80 e. $4.95
Let S = $49, s = 20%, and r = 6.5% (continuously compounded). The stock is set to pay a single dividend of $1.40 nine months from today, with no further dividends expected this year. Use the Black-Scholes model (adjusted for the dividend) to compute the value of a one-year $50-strike European call option on the stock.
Answers:
a. $3.98
Correctb. $4.19
c. $3.37
d. $2.80
e. $4.95
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