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Using the data above, as the base case, find the value of the call for a range of stock prices, say from $5 to $300
Using the data above, as the base case, find the value of the call for a range of stock prices, say from $5 to $300 in increments of $5. Plot these values in excel. Comment on how the value approaches certain limits, i.e. when the option is deep in the money, what is the limit on the value of the option. What happens to the time value of the option?
Stock Price (S) Exercise Price (X) Risk-Free Rate (Rt) Variance (6) Time in Years (T) 50 45 0.06 0.2 0.25Step by Step Solution
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