Consider a stock worth K12.50 that can go up or down by 15% per period. Assume...

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Consider a stock worth K12.50 that can go up or down by 15% per period. Assume...

Consider a stock worth K12.50 that can go up or down by 15% per period. Assume a period process of one. The risk-free rate is 10%. Find the value of the call option today with the strike price of K11.50.

business accounting

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Answer 1

Answer #1

Value of call option can be stated as

Strike Price / Growth Rate - Risk free rate

= 11.5 k / (0.15 - 0.1) = 230

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Answer 2

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Consider a stock worth K12.50 that can go up or down by 15% per period. Assume...

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Consider a stock worth K12.50 that can go up or down by 15% per period. Assume...

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