What is the value of a 6 month european put option

Assignment Help Financial Management
Reference no: EM131237322

A stock price is currently $50. It is known that at the end of 6 months it will be either $45 or $55. The risk-free interest rate is 10% per annum with continuous compounding.

What is the value of a 6-month European put option with a strike price of $50?

Reference no: EM131237322

Questions Cloud

How much it costs to use appliances at an electrical cost : On a particular day, the following appliances are used for the times indicated: coffee maker, 40 min, and microwave oven, 12 min. Using the power requirements given in Table 4.4, find how much it costs to use the appliances at an electrical cost o..
What is meant by the delta of a stock option : Explain the no-arbitrage and risk-neutral valuation approaches to valuing a European option using a one-step binomial tree. -  What is meant by the ‘‘delta'' of a stock option?
Discuss key facts and critical issues presented in the case : Give a detailed summary of the forensic investigation's findings along with the evidence against Mr. McVeigh. In a narrative format, discuss the key facts and critical issues presented in the case. Minimum word count is 500 words.
Does heat always flow from a body with more internal energy : Heat always flows from a high-temperature body in contact with one with a low temperature. Does heat always flow from a body with more internal energy to one with less internal energy? (Hint: Think about dropping a hot BB into a tub of water.
What is the value of a 6 month european put option : A stock price is currently $50. It is known that at the end of 6 months it will be either $45 or $55. - What is the value of a 6-month European put option with a strike price of $50?
Why do sidewalks have lined joints built into them : When eating a piece of hot apple pie, you may find that the crust is only warm but the apple filling burns your mouth. Why is this? Why do sidewalks have lined joints built into them?
What is the value of a 1 year european call option : The risk-free interest rate is 8% per annum with continuous compounding.  -  What is the value of a 1-year European call option with a strike price of $100?
How does it compare in magnitude with metric units : What is the unit of heat in the British system, and how does it compare in magnitude with metric units? What does the specific heat of a substance tell you when you compare it to the specific heat of another substance?
What is the value of a 1 year european call option : The risk-free interest rate is 8% per annum with continuous compounding. What is the value of a 1-year European call option with a strike price of $100?

Reviews

Write a Review

 

Financial Management Questions & Answers

  What is the horizon value at the end of year five

what is the horizon value at the end of year 5? The free cash flow is expected to grow 8% from year 1 to 5 and 6% after year 5 to infinity,

  What is the markup percentage for braided belts

What is the mark up percentage on an item that costs$183 a dozen and retails for $30.00 each. Determine the cost of a jacket that retails for $249 and has a 49% markup. What is the markup percentage for braided belts that cost $78.00 a dozen and reta..

  Would this provision affect the foundation request for tax

If the provision stated that upon dissolution of the Foundation its assets would be sold at auction and the proceeds of that auction returned to the original donors to the Foundation, would this alternative provision affect the Foundation's request f..

  Perform a complete ratio analysis of a firm

What is the difference between the firm's operating cycle and its cash conversion cycle?Which would be more important to you as an owner and why?

  What is cost of equity using capm

Suppose our company has a beta of 1.5. The market risk premium is expected to be 9%, and the current risk-free rate is 6%. What is cost of equity using CAPM?

  Explain how banks move loans off the balance sheet

Explain how banks move loans off the balance sheet. What motivates different types of off balance sheet activities? Discuss the risks these actions involve.

  Problem associated with discounted payback

Which of the following is NOT a problem associated with discounted payback?

  Annual standard deviation of returns on stock

The annual standard deviation of returns on Stock A’s equity is 31% and the correlation coefficient of these returns, with those on the market index (S&P 500 index), is 0.82. Comparable numbers of Stock B are 34% and 0.64. What can you say about Stoc..

  The conference on evaluating capital projects

The conference on evaluating capital projects has been very helpful. You have received a significant amount of information and multiple projects to evaluate to hone your skills. Should they be accepted? How does a change in the required rate of retur..

  How long will it take to double your money

If you deposit money today in an account that pays 14.5% annual interest, how long will it take to double your money? Round your answer to two decimal place

  What are the portfolio weights and what is its beta

A stock has a beta of 1.25 and an expected return of 12.3 percent. A risk-free asset currently earns 4.05 percent. Required: (a) What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets h..

  Time value of money important for individual

Why is the time value of money important for an individual to understand in regard to their private life? What can an individual do with this information?

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