Determine the black-scholes option pricing model

Assignment Help Financial Management
Reference no: EM131303421

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? - Determine the Black-Scholes option pricing model - Summarize what are given, what you need to find? You need to find the option price - find d1 and d2 before you find N(d1) and N(d2) -find N(d1) and N(d2): several days to find them but it is easy to use Excel spreadsheet but look for normal distribution commend - From here you should be able to find the option price, then find the value of options when the number of options are given I would suggest you to use the Excel spreadsheet to show all your work which is quicker and more accurate, however you can choose a different way

Reference no: EM131303421

Find the amount of interest paid over the five years of loan

Assume you take out a $180,000, 30 year mortgage at 3.5%. The loan is fully amortized and payments are monthly. Find the amount of interest paid over the 5 years of the loan(6

What is net present value of project

What is the present value of a $400 payment in one year when the discount rate is 5 percent? A proposed project has an initial cost of $70,500 and is expected to produce cash

Explain with examples how the cost of capital is determined

The Genesis Energy operations management team was excited to understand the various options for securing financing to fund the rapid growth plans. Explain with examples how th

Evaluate the impact of each of the off-balance-sheet items

David Wright, CFA, an analyst with Blue River Investments, is considering buying a Montrose Cable Company corporate bond. He has collected the following balance sheet and inco

Required rate of return for the global investment fund

Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is

What are arithmetic and geometric returns for stock

A stock has had returns of 14 percent, 11 percent, 4 percent, -11 percent, -8 percent, and 20 percent over the last six years. What are the arithmetic and geometric returns fo

Calculate the npv for this improved machine

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $1300. However, once b

How many months will it take you to pay off entire balance

When you graduate you have $15,000 on your credit card which charges an APR of 14% compounded monthly. The credit card company tells you that your minimum payment is $232.90.


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd