+1-415-315-9853

info@mywordsolution.com

## Accounting

 Accounting Basics Cost Accounting Financial Accounting Managerial Accounting Auditing Taxation

Provide Answer of the following problems given the following call option prices on Google (GOOG) and on Apple (APPL).
Note that these are actual option prices on 2/21/13 and these contracts have 60 days until expiration. The 2-month T-bill rate is about 4.75%. Attach all work with your appropriate report.

Part One:

1. Estimate the theoretical option values for the call on GOOG with K =800 and for the call on APPL with K = 450 by using the Black-Scholes-Merton and Binomial Models program. You can also use the following website to evaluate the option prices and implied volatility www.option-price.com

2. When estimating the option values suppose various standard deviations of returns of 10%, 15%, 20%, up to 100% or till you find the theoretical option value is close to the actual one.

3. Draw a graph showing the relationship between option values and standard deviations.

4. Based on the graph, what does the actual option value imply about the anticipated future standard deviation (volatility)? Which option has higher implied volatility and is it surprising?

Part Two:

1. Estimate the historical standard deviation of the GOOG*.

2. Compare the implied standard deviation with the historical standard deviation.

3. What can you infer from the difference, if any, between the two numbers?

Part three:

1. Evaluate the implied volatility for all options.

2. Do you have the same implied volatility for the two options on the same underlying? What may be capable to describe the differences?

Financial Accounting, Accounting

• Category:- Financial Accounting
• Reference No.:- M93433

Have any Question?

## Related Questions in Financial Accounting

### You may have to start with a free trial with a credit card

You may have to start with a free trial with a credit card and cancel directly after this module submission. Once QuickBooksTM is loaded, you may have to reboot your computer. Setting up company: Go to Home page, select ...

### The product life cycle plc is a theory that has strong

The Product Life Cycle (PLC), is a theory that has strong roots in marketing and is a standard for determining the historical development of products and industries from introduction to a presumably eventual decline. Eac ...

### Capital investment analysisgyro corporation is considering

Capital Investment Analysis Gyro Corporation is considering two investment projects, each of which will cost \$1,340,000. The estimated cash flow for each project is as follows. Year Plant Expansion Retail Store Expansion ...

### Defend the answerlisa conducts a qualitative study of

DEFEND THE ANSWER Lisa conducts a qualitative study of people's online shopping behavior. She compares her results to that of similar studies and finds a similarity in coding across multiple studies. On the basis of the ...

### Community budget analysis - government homework helpyou are

Community Budget Analysis - Government Homework Help You are the City Administrator for your community. You received a letter from a community member demanding to know why their tax dollars are being used by the city for ...

### Accounting discussion questionsdq1review the provisions of

ACCOUNTING DISCUSSION QUESTIONS DQ1 Review the provisions of the Sarbanes-Oxley Act of 2002 to address the accounting scandals in the late 1990s and early 2000s (Enron, WorldCom, etc.). Identify the provisions that you b ...

### What is the main purpose of the healthcare reform also

What is the main purpose of the Healthcare Reform also known as the Affordable Care Act? How will individual States influence delivery and how should reform alternatives be considered?

### Assignment non florida fte case problemin the state of xxx

Assignment: Non Florida FTE Case Problem In the State of XXX, funding of public education is handled through a Foundation program. The state funds a student at a weighted FTE value of \$3,150. Based on a local school dist ...

### Assignmentin a survey 24 it professionals in chicago were

Assignment In a survey, 24 IT professionals in Chicago were asked how much their annual salary was for the year 2012. The results are shown below: \$109,000 \$ 65,000 \$ 65,000 \$ 59,000 \$ 180,000 \$ 101,325 \$ 130,000 \$95,000 ...

### Assignmentholden graham started the graham co a new

Assignment Holden Graham started The Graham Co., a new business that began operations on May 1. The Co. completed the following transactions during its first month of operations. H. Graham invested \$43,500 cash in the co ...

• 13,132 Experts

## 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.

### Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

### Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

### Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

### Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

### Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen