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

Ask question #Minimum what are the challenges that a finance manager may face?

Constant amount per share or fixed D.P.S. 1. The DPS is fixed in total amount of irrespective of the earnings level. These generate certainty and are consequently preferred vi

On 1 January 2008, a young artist called Michelangelo signed a contract with a charity named Art Angels, which supports young artists to do large projects. The agreement requires M

How long until I get the results of my order

#The following is the existing capital structure of Company XYZ Ltd. Ordinary shares at Shs.10 par 1,000,000 Retained 800,000 12% preference shares Shs.10 par 400,000 16% loan Shs.

Leverage and Coverage Ratios   (The data for interest coverage are in I-Metrix's liquidity ratios section.  The others listed in this table are in the leverage ratios section

The topic taken for this study is "FINANCIAL VIABILITY OF X BY APPLYING CREDIT SCORE MODEL".  The study has attempted to analyze the financial viability of the company by applyi

Internal finance can avoid the agency costs of debt and equity finance. In practice it is the most important source of funding. (a) Discuss potential problems of internal financ

What is Nominal and Real Return While nominal return is the return in nominal rupees, real return is equal to the nominal return adjusted for changes in prices i.e. rate of