Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please solve using black and scholes. the correct amswer is $183,608.37 14. You own a lot in Key West, Florida, that is currently unused. Similar
please solve using black and scholes. the correct amswer is $183,608.37 14. You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1.6 million Over the past five years, the price of land in the area has increased 16 percent per year, with an annual standard deviation of 23 percent. A buyer has recently approached you and wants an option to buy the land in the next 15 months for $1,700,000. The risk-free rate of interest is 7 percent per year, compounded continuously. How much should you charge for the option? A) $174,427.95 B S192,788,79 E)$183,608.37 C) $167,333.68 D) $137,677.81
please solve using black and scholes. the correct amswer is $183,608.37
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started