Option Pricing, Finance Basics

Show that for any constant 0=a=1,
C(aK1 + (1-a)K2) = aC(K1) + (1-a)C(K2)
where C(k) is the European option price with strike K. All the options in this question are assumed to be written on the same stock, and have same maturity date. Note: The butterfly is a special case when a=0.5.
Posted Date: 2/18/2013 2:32:34 AM | Location : Canada







Related Discussions:- Option Pricing, Assignment Help, Ask Question on Option Pricing, Get Answer, Expert's Help, Option Pricing Discussions

Write discussion on Option Pricing
Your posts are moderated
Related Questions
Managerial Finance Functions Require skilful execution, control and planning of financial activities.  Hence there are four significant managerial finance functions. Such are

The Bim-Bom Company is expected to pay a dividend of $3.10 per share at the end of the year, and that dividend is expected to grow at a constant rate of 4.00% per annum.  The compa

Three of these companies have bonds that carry investment - grade ratings. The other 3 companies carry junk - bond ratings. Judging by the information in the table, which 3 compani

How are financial trades made on an organized exchange? Ans: Each exchange-listed security is traded at a fixed location on the trading floor known as the post. The trading is

Functions of Capital Markets Functions of Capital Markets are as: 1. Providing long term funds that are essential for investment decisions. 2. Provide advices to investo

The business plan for a new company that has obtained a 5 year lease for operating a local bus service is shown below.  Items marked with an asterisk represent continuous cash flow

iwant to learn how todo the maths for accounting

Differences between Debt and Preference Share Capital Differences between Debt and Preference Share Capital are given below:   DEBT

how much

Advantage of Bill - Source of Finance Advantages of necessitating a Bill as a Source of Finance They are a faster means of raising finance whether drawer is credible.