Determine the black-scholes option pricing model

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Lisa Sweet, the CEO of Digital Storage Devices has been granted options on 300,000 shares. The stock is currently trading at $27 a share and the options are at the money. The volatility of the stock has been about .15 on an annual basis over the last several years. The options mature in five years, become exercisable in three years, and the risk free rate is 4%. What is the value of Lisa’s options? - Determine the Black-Scholes option pricing model - Summarize what are given, what you need to find? You need to find the option price - find d1 and d2 before you find N(d1) and N(d2) -find N(d1) and N(d2): several days to find them but it is easy to use Excel spreadsheet but look for normal distribution commend - From here you should be able to find the option price, then find the value of options when the number of options are given I would suggest you to use the Excel spreadsheet to show all your work which is quicker and more accurate, however you can choose a different way

Reference no: EM131303421

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