1 a stock is trading for 123 with a u of 125 and a d of 085, Ask an Expert

Finance

1. A stock is trading for $123, with a u of 1.25 and a d of 0.85 and an expected $5 divided in period 1. The one period risk free rate is 3%. What is the value of a two period call option with an exercise price of 125.

2. You invest $5M in Mexico’s equity markets at the spot rate of MXP 20/$. After 1 year, the equity index returns 18% and the spot FX rate then is MXP 23/$. What is our dollar-based return on investment?

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Financial Management, Finance

Category:- Financial Management
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