Question
RTF Inc. has options traded on the CBOE. As a measure of its volatility, assume the stock price can either go up to $40 or
RTF Inc. has options traded on the CBOE. As a measure of its volatility, assume the stock price can either go up to $40 or down to $15. Interest rates that apply are 1%. The current market price of a strike 25 call option on RTF is $6.09 per share. What would the current price of the stock be if you apply one-period binomial model to find it?
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Financial Markets And Institutions
Authors: Jeff Madura
10th Edition
1285531507, 9781285531502
