Question
The stocks price S is $100. After three months, it either goes up and gets multiplied by the factor U = 1.13847256, or it goes
The stocks price S is $100. After three months, it either goes up and gets multiplied by the factor U = 1.13847256, or it goes down and gets multiplied by the factor
D = 0.88664332.
Options mature after T = 0.5 year and have a strike price of K = $105.
The continuously compounded risk-free interest rate r is 5 percent per year.
If the stock pays a $1 dividend just before the end of the first three months, then todays price of a European call is:
| a. | $4.86 |
| b. | $5.73 |
| c. | $6.00 |
| d. | $11.59 |
| e. | None of these answers are correct. |
ANS: B how?
If the stock pays a $1 dividend just before the end of the first three months, then todays price of a European put is:
| a. | $2.44 |
| b. | $5.73 |
| c. | $9.12 |
| d. | $16.03 |
| e. | None of these answers are correct. |
ANS: C how?
If the stock pays a 1 percent dividend just before the end of the first three months, then todays price of a European call is:
| a. | $5.69 |
| b. | $5.73 |
| c. | $6.00 |
| d. | $7.96 |
| e. | None of these answers are correct. |
ANS: A how?
If the stock pays a 1 percent dividend just before the end of the first three months, then todays price of a European put is:
| a. | $8.41 |
| b. | $9.09 |
| c. | $9.12 |
| d. | $10.03 |
| e. | None of these answers are correct. |
ANS: B how?
Todays price of an American call option is:
| a. | $4.86 |
| b. | $5.73 |
| c. | $6.00 |
| d. | $11.59 |
| e. | None of these answers are correct. |
ANS: C how?
Todays price of an American put option is:
| a. | $8.41 |
| b. | $9.05 |
| c. | $9.12 |
| d. | $10.03 |
| e. | None of these answers are correct. |
ANS: B how??
thanks!
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AS Accounting For AQA
Authors: David Cox,Michael Fardon
2nd Edition
1905777140, 978-1905777143
