Question

1a. For a stock trading at $50 with 15% volatility and 2% risk free interest rate, find the prices of a one month put and cal
show work, step by step and explain please. no excel.
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Answer #1

a)price of call and put options are $7.916 and $0.9536

b)due to increase in strike price to $55 the price of call and put options changed to $0.0045 and $2.4584

c)due to doubling time of maturity the prices of call and put options changed to $10.41 and -$0.6560

NOTES:

Solution was solved using normal distribution , logerthemic and exponential tables.C asing Same blact schale del |b asing Same black-Scholes model Clven, E (strike price) 5s,Ssotmonth LER olasali) 15% e 1oo16Sold-atberueer 9 C) using Same blact -Scholes model JE -0.y082 E 50, S= $50, t 2months aiven ,-2% 9 e*t= /0066 0+(o-03125)1nAnswer (a) using Black-Scholes Fomula Civen eta00/6 =Q%S$5o, E(Strikeprice) =50,t-1month 15%, O-022s d, ELS(o.2887) otfo03/25

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