Question
You own a one-year European call option to buy one acre of Los Angeles real estate. The exercise price is $2.08 million, and the current,
You own a one-year European call option to buy one acre of Los Angeles real estate. The exercise price is $2.08 million, and the current, appraised market value of the land is $1.78 million. The land is currently used as a parking lot, generating just enough money to cover real estate taxes. The annual standard deviation is 17% and the interest rate is 11%.
How much is your call worth?
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Earnings Quality
Authors: Andrew P.C.
1st Edition
1521507724, 978-1521507728
