The current stock price of KLMCO iNC is $111.00. You expect the stock price a year from now to be either $128.00 or $92.00 with equal probabilities . The interest rate at which investors can borrow is 11%. using the binomial opm, what should be the price of a put option with an exercise price of $120.00 an expiration date one year from now

The current stock price of KLMCO iNC is $111.00. You expect the stock price a year from now to be either $128.00 or $92.00 with equal probabilities . The interest rate at which investors can borrow is 11%. using the binomial opm, what should be the price of a put option with an exercise price of $120.00 an expiration date one year from now

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter5: Financial Options

Section: Chapter Questions

Problem 4P: Put–Call Parity The current price of a stock is $33, and the annual risk-free rate is 6%. A call...

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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.)
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