Compute the price of the call

Assignment Help Finance Basics
Reference no: EM131360682

Rebecca is interested in purchasing a European call on a hot new stock, Up, Inc. The call has a strike price of $ 96.00

and expires in 93days. The current price of Up stock is $ 119.49,and the stock has a standard deviation of 41 %per year. The risk-free interest rate is 6.42 %per year. Up stock pays no dividends. Use a 365-day year.a. Using the Black-Scholes formula, compute the price of the call.b. Use put-call parity to compute the price of the put with the same strike and expiration date.(Note:Make sure to round all intermediate calculations to at least five decimal places.)

a. Using the Black-Scholes formula, compute the price of the call. The price of the call is $. (Round to two decimal places.)

b. Use put-call parity to compute the price of the put with the same strike and expiration date.The price of the put is $. (Round to two decimal places.)

Reference no: EM131360682

Questions Cloud

Important characteristic of inventions : Q1. At the time the electric light bulb was invented by Edison, a major challenge he faced in selling them was: Q2. An important characteristic of inventions is that they have practical applications.
Speculate on the major challenges you anticipate facing : Bus 475- Choose and research a country other than the United States, and then formulate a plan to effectively integrate this product from a global and social standpoint. Speculate on the major challenges and opportunities you anticipate facing in ..
State your thesis on the significance of current role of us : By the mid-20th century, the United States had become the dominant force in international relations. Some have argued that the United States' military functions as the world's "police." This assignment covers the manner in which this shift occurre..
What facility consideration are involved regarding equipment : Write a justification for capital purchase to your vice president as to why this would be a good investment for the hospital. Include the operating costs you took into consideration and what facility considerations are involved regarding this new..
Compute the price of the call : Using the Black-Scholes formula, compute the price of the call. The price of the call is $. (Round to two decimal places.) Use put-call parity to compute the price of the put with the same strike and expiration date.The price of the put is $. (Roun..
Write the given essay assignment : Write essay comparing Martin Luther Kings speech "But if Not" to Colin Kaepernicks actions during NFL 2016 season.
Constant debt-equity ratio : Suppose Caterpillar, Inc., has 655 million shares outstanding with a share price of $ 72.06 and $ 25.67billion in debt. If in three years, Caterpillar has 702million shares outstanding trading for $ 86.98per share, how much debt will Caterpillar h..
How did colonists ideas about government differ : How did colonists' ideas about government differ from those of the British in the 1760s??
What are key difference you notice between different models : What are the key differences you notice between different models & different manufacturers (try to compare TVs in same price point)? How important are these differences in consumer purchase behavior?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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