Question compute the calls valuefollowing data for a, Ask an Expert

Finance

Question: Compute the call's value.

Following data for a single-period binomial model:

· A stock's price S is $50. After six months, it either goes up by the factor U = 1.22095341 or it goes down by the factor D - 0.79881010.

· Options mature after T = 0.5 year and have strike price K = $45.

· A dollar invested in the money market account earns continuously compounded risk-free interest at 2 percent per year.

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92266855

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Mrs salmon agrees to repay a loan by paying 500 at the end

Mrs. Salmon agrees to repay a loan by paying $500 at the end of each month for 5 years. The first payment is due at the end of the 6th month from today and the remaining payments will continue for another 59 months. If t ...

What are the benefits of a country having a positive

What are the benefits of a country having a positive Current Account and what are the benefits of a country having a negative Current Account?

Roll tide inc has 10000 shares of common stock outstanding

Roll Tide, Inc. has 10,000 shares of common stock outstanding at a price of $18 a share. The firm's beta is 1.3 and the market risk premium is 6.5%. The Treasury bill rate is 3.5%. There are 9,000 shares of preferred sto ...

How to make sure that no patients information will be

How to make sure that no patient's information will be accessed without authorization during implementation of Electronic Health Records in a hospital. What are the steps to follow?

Question - bio-science inc will pay a common stock dividend

Question - Bio-Science Inc. will pay a common stock dividend of $4.60 at the end of the year (D 1 ). The required return on common stock (Ke) is 17 percent. The firm has a constant growth rate (g) of 7 percent. Compute t ...

You purchase an investment which will pay you 750000 in 20

You purchase an investment which will pay you $750,000 in 20 years. At a rate of 7.50%, how much must you pay for this investment today (using monthly compounding)?

What is the difference between earnings per share and pe

What is the difference between Earnings per Share and P/E ratio? What do they measure?

A new computer system will require an initial outlay of

A new computer system will require an initial outlay of $15,000, but it will increase the firm's cash flows by $3,000 a year for each of the next 6 years. a. Calculate the NPV and decide if the system is worth installin ...

Your parents are giving you 190 a month for 4 years while

Your parents are giving you $190 a month for 4 years while you are in college. At an interest rate of .45 percent per month, what are these payments worth to you when you first start college? $7,912.94 $7,776.51 $10,154. ...

Kings department store is contemplating the purchase of a

King's Department Store is contemplating the purchase of a new machine at a cost of $36,686. The machine will provide $4,900 per year in cash flow for fourteen years. King's has a cost of capital of 12 percent. calculate ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert