Calculate the price of one-year call option

Assignment Help Financial Management

Reference no: EM131978925

The current price of Kulalat Corporation is $35.0. Its stock price will either go up by 40% or go down by 40% in one year. The stock pays no dividends. The one-year risk-free interest rate is 5%. Using the binomial model, calculate the price of a one-year call option on Kulalat stock with a strike price of $45. (Show your calculations; use a binomial tree/timeline with two branches to summarize the information). No excel, please.

Reference no: EM131978925

Questions Cloud

Find the npv for both conveyor belt systems : Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems. System A costs $290,000, has a four-year life.

What is the value of this long forward contract : If the risk-free rate is 12% per annum with continuous compounding, what is the value of this long forward contract?

The short-term or the long-term maturity : Is the spread larger for the short-term or the long-term maturity?

What would be ssc estimated cost of equity : Situational Software Co. (SSC) is trying to establish its optimal capital structure. Its current capital structure consists of 25% debt and 75% equity.

Calculate the price of one-year call option : Calculate the price of a one-year call option on Kulalat stock with a strike price of $45.

Analysis of statistics and engineering factors : ENG1004 Engineering Problem Solving Principles Report Assessment - Analysis of Statistics and Engineering Factors of Relevant to Chosen Field

Estimate total financing requirements : Estimate H & M corp. total financing requirements (i.e., total assets) for 2001 and its net funding requirements (DFN). Give a brief summary of forecasting.

Put some money in an account : Your grandfather put some money in an account for you on the day you were born.

Accounting issues about a particular organisation : which raises management accounting issues about a particular organisation. The article must be written recently (after 1 July 2017) and taken from

User Account

All Pages