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Find expected outcome for each game

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Reference no: EM133168872

Question - You can participate in one of two games:

Game 1: Pays $1M with probability 1.0

Game 2: Pays $5M with probability 0.1

Pays $1M with probability 0.89

Pays $0 with probability 0.01

Required -

Find expected outcome for each game and the standard deviation of each game?

Suppose that the game is to be played six months from today. If you purchased 1,000 games and sold 20,000 securities on it, what would be the price of each security? Make this computation for both games. Note, the risk-free rate is 2.5%.

Find the price of call and put options with strike prices of $1M?

Reference no: EM133168872

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