User Account

All Pages

What is the option value

Assignment Help Finance Basics
Reference no: EM132685507

Black-Scholes ModelCurrent stock price = $15 Strike price of option = $13 Time to maturity of option = 3 months

Assume that you have been given the following information on Purcell Industries' call options:

Risk-free rate = 8%

Variance of stock return = 0.14

d1 = 0.96535 N(d1) = 0.83282

d2 = 0.77827 N(d2) = 0.78179

1) According to the Black-Scholes option pricing model, what is the option's value? Do not round intermediate calculations. Round your answer to the nearest cent. Use only the values provided in the problem statement for your calculations.

Reference no: EM132685507

Questions Cloud

Determine the amount in AUD as at March : The machinery is completed on 1 June 2021 and shipped FOB Auckland on that date. Determine the amount in AUD, as at 1 March 2020; and 30 June 2020
What special responsibilities new computer professionals : What special responsibilities new computer professionals have with respect to understanding and protecting the privacy rights of their fellow citizens ?
What are the entries Frankie should record at inception : Assuming Frankie's incremental borrowing rate is 5%, what are the entries Frankie should record at inception of the contract, then at the end of years
Majority of population associates blockchain : The vast majority of the population associates Blockchain with cryptocurrency Bitcoin; however, there are many other uses of blockchain;
What is the option value : Black-Scholes ModelCurrent stock price = $15 Strike price of option = $13 Time to maturity of option = 3 months
Record the issuance of the bonds : Annual coupon rate (C): 10%; semi-annual payment on June 30 and December 31. Record the issuance of the bonds on 1/1/2020
Compute the Overall Materiality and Tolerable Misstatement : Assume as well that the Tolerable misstatement is 50% of the Overall Materiality. Compute the Overall Materiality and Tolerable Misstatement
Prepare an adjusting journal : Premium paid in March 2019. For insurance closed for the benefit of the company of Rp. 200,000, - Prepare an adjusting journal
How should set the Detection Risk : If Cruz, Gomez & Co. intends to keep the audit risk below 8%, how should they set the Detection Risk? Discuss the impact of their assessment

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd