Question
Spencer calculates that shares of Tardis Intertemporal, currently trading at $100, will either increase to $200 or decrease to $50 in one year with a
Spencer calculates that shares of Tardis Intertemporal, currently trading at $100, will either increase to $200 or decrease to $50 in one year with a 50/50 probability. Spencer is considering a one year $175.00 call option. The simple interest rate is 10.250%.
The price per share of leveraged stock is $
The hedge ratio is 1/
The price of the call option should be per share.
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International Financial Management
Authors: Geert Bekaert, Robert Hodrick
3rd edition
1107111820, 110711182X, 978-1107111820
