Use? put-call parity to compute price of put with strike

Assignment Help Financial Management

Reference no: EM131319903

Rebecca is interested in purchasing a European call on a hot new? stock, Up, Inc. The call has a strike price of $98.00 and expires in 88 days. The current price of Up stock is $119.05?, and the stock has a standard deviation of 38% per year. The? risk-free interest rate is 6.54% per year. Up stock pays no dividends. Use a? 365-day year.

a. Using the? Black-Scholes formula, compute the price of the call (round all intermediate calculations to at least five decimal? places).

The price of the call is: $ __?__ (Round to final answer to Part A to two decimals)

b. Use? put-call parity to compute the price of the put with the same strike and expiration date (round all intermediate calculations to at least five decimal? places).

The price of the put with the same strike and expiration date is: $ __?__ ?(Round final answer to Part B to two decimals)

Please provide the complete answers to part a. & b. and not just the d1 and d2 of each, rounding all intermediate calculations to at least five decimal places.

Reference no: EM131319903

Questions Cloud

Prepayment penalty based on the loan balance : On September 1, 2011, Susan Chao bought a motorcycle for $31,000. She paid $1,100 down and financed the balance with a five-year loan at a stated annual interest rate of 7.3 percent compounded monthly. Two years later, at the end of October 2013, Sus..

Discuss characteristics of complete electromagnetic field : Briefly outline the reasoning used for the removal of the inconsistency with Maxwell's equations of the intuitively derived fields due to the Hertzian dipole.

What is the expected standard deviation of the stock : You are interested in buying a stock that has a price of $42. You have projected that next year there is: a 10% probability the stock will equal $1, a 20% probability the stock will equal $31, a 30% probability the stock will equal $43, a 30% probabi..

Identify what pbm stand for and in what concept is behind it : Identify what PBM stands for, and in what the concept is behind it? Explain how the HMO Act of 1973 contributed to the growth of managed care. Describe the key steps in developing a modern quality management program.

Use? put-call parity to compute price of put with strike : Rebecca is interested in purchasing a European call on a hot new? stock, Up, Inc. The call has a strike price of $98.00 and expires in 88 days. The current price of Up stock is $119.05?, and the stock has a standard deviation of 38% per year. Use? pu..

Analyze the role the company top leaders play in the culture : Assess whether the company is successful at collaboration. If so, provide an example that supports your opinion. If not, discuss why it is not successful. Analyze the role the company's top leaders play in the culture of collaboration

What hypothesis would you be testing here : a. What hypothesis would you be testing here? b. What is the critical value if the level of significance is 5%? c. Calculate the slope and intercept of the regression line.

What are the salary ranges of these careers : What career opportunities are available for individuals who obtain a degree in criminal justice?What are the salary ranges of these careers?Are more opportunities available for those individuals who continue in their degrees with a Master's degree in..

Analyze the current situation of the organization in market : Explain the current situation of the organization in the market (industry, market, and general environment analysis). Assess the financial performance and condition of the organization.

User Account

All Pages