A stock currently sells for 50 and can rise by 6 or fall by 4 for each of the next two periods. The risk free rate of interest is 0 per period. The value of a call option with strike price of 48 is
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A stock currently sells for 50 and can rise by 6 or fall by 4 for each of the next two periods. The risk free rate of interest is 0 per period. The value of a call option with strike price of 48 is
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- Put–Call Parity The current price of a stock is $33, and the annual risk-free rate is 6%. A call option with a strike price of $32 and with 1 year until expiration has a current value of $6.56. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option?A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?Binomial Model The current price of a stock is 20. In 1 year, the price will be either 26 or 16. The annual risk-free rate is 5%. Find the price of a call option on the stock that has a strike price of 21 and that expires in 1 year. (Hint: Use daily compounding.)
- A stock is currently selling for $59. Over the next two periods, the stock will move up by a factor of 1.15 or down by a factor of .87 each period. A call option with a strike price of $60 is available. If the risk-free rate of interest is 2.5 percent per period, what is the value of the call option?A stock is currently selling for $39. In one period, the stock will move up by a factor of 1.29 or down by a factor of .53. A call option with a strike price of $50 is available. If the risk-free rate of interest is 2.5 percent for this period, what is the value of the call option?A stock is currently selling for $39. Over the next two periods, the stock will move up by a factor of 1.29 or move down by a factor of 0.53 each period. A call option with a strick price of $50 is available. If the risk-free rate of interest is 3.2 percent per period, what is the value of the call option?
- A stock is currently priced at $45 and will move up by a factor of 1.23 or down by a factor of .61 each period over each of the next two periods. The risk-free rate of interest is 3 percent. What is the value of a put option with a strike price of $54?A stock with a current price of $43 will either move up by a factor of 1.20 or down by a factor of 0.80 each period over the next two periods. The risk-free rate of interest is 3 percent. What is the current value of a call option with a strike price of $45?A stock is currently priced at $74 and will move up by a factor of 1.20 or down by a factor of .80 over the next period. The risk-free rate of interest is 4.2 percent. What is the value of a call option with a strike price of $75?
- A stock with a current price of $40 will either move up to $41 or down to $39 over the next period. The risk-free rate of interest is 2.45 percent. What is the value of a call option with a strike price of $40?The current price of a stock is $33, and the annual risk-free rate is 6%. Acall option with a strike price of $32 and with 1 year until expiration has acurrent value of $6.56. What is the value of a put option written on the stockwith the same exercise price and expiration date as the call option?A stock is currently selling for $55 per share. A call option with an exercise price of $65 sells for $3.85 and expires in six months. If the risk-free rate of interest is 3.5 percent per year, compounded continuously, what is the price of a put option with the same exercise price?
