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Lisa Sweet, the CEO of Digital Storage Devices has been granted options on 300,000 shares. The stock is currently trading at $27 a share and the options are at the money. The volatility of the stock has been about .15 on an annual basis over the last several years. The options mature in five years, become exercisable in three years, and the risk free rate is 4%. What is the value of Lisa’s options?

 

Please show formulas in an excel spreadsheet with d1, d2, option prices and value of options

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92058104

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