Assume that, in one day, a stock price can go up by 1 point with probability...
Assume that, in one day, a stock price can go up by 1 point with probability 0.4, or down by 1 point with probability 0.3; the price can also remain the same. After 40 days, what is the probability that the stock price increases by more than 6.5 points?
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Assume that, in one day, a stock price can go up by 1 point with
probability...
Each day the price of a stock goes up a dollar with probability .75, or down...
Each day the price of a stock goes up a dollar with probability .75, or down a dollar with probability .25. Assuming these fluctuations to be independent, what is the probability that after 6 days the stock will be trading at the same price? What is the probability that it will have gone down? How can I do it in Microsoft Excel?
Suppose that each day the price of a stock moves up 1/8 th of a point...
Suppose that each day the price of a stock moves up 1/8 th of a point with probability 1/3 and down 1/8 th of a point with probability 2/3. The price fluctuations are independent each day. (a) What is the probability that the stock has a price gain in 6 days?
An investment analyst found that a certain stock price goes up or down a point every...
An investment analyst found that a certain stock price goes up or down a point every day with probabilities 0.75 and 0.25, respectively. Daily fluctuations are independent. Find the probability that after four days, the stock price will be the same as initially?
The current price of Estelle Corporation stock is $ 25.00. In each of the next two years, this stock price will either go up by 23 % or go down by 23 %. The stock pays no dividends. The one-year ris...
The current price of Estelle Corporation stock is $ 25.00. In each of the next two years, this stock price will either go up by 23 % or go down by 23 %. The stock pays no dividends. The one-year risk-free interest rate is 5.3 % and will remain constant. Using the Binomial Model, calculate the price of a one-year put option on Estelle stock with a strike price of $ 25.00.
Consider a binomial world in which the current stock price of 80 can either go up...
Consider a binomial world in which the current stock price of 80 can either go up by 10 percent or down by 8 percent. The risk-free rate is 4 percent. Assume a two-period world. Answer the following: What is the value of the call if the stock goes up, then down? What is the hedge ratio if the stock goes down one period? What is the current value of the call?
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.
The current price of Estelle Corporation stock is $29.00. In each of the next two years,...
The current price of Estelle Corporation stock is $29.00. In each of the next two years, this stock price will either go up by 21% or go down by 21%. The stock pays no dividends. The one-year risk-free interest rate is 6.5% and will remain constant. Using the Binomial Model, calculate the price of a one-year put option on Estelle stock with a strike price of $29.00
The current price of Estelle Corporation stock is $25. Its stock price will either go up...
The current price of Estelle Corporation stock is $25. Its stock price will either go up by 20% or go down by 20% in one year. The stock pays no dividends. The one-year risk-free interest rate is 6%. Using the binomial model, calculate the price of a one-year call option on Estelle stock with a strike price of $25. The price of a one-year call option on Estelle stock with a strike price of $25 is $ (Round to the...
6. This week, the probability that the FTSE Index ends higher than on the previous day...
6. This week, the probability that the FTSE Index ends higher than on the previous day is 0.8. Throughout this question, assume that the FTSE index never remains the same from one day to the next. (a) Calculate the probability that the FTSE Index ends down on the previous day's value'. (1 mark) (b) Draw a tree diagram showing the behaviour of the FTSE Index for three con- secutive days. Include probability values. (3 marks) (c) Calculate the probability that...
An investment analyst found that a certain stcok price goes up or down a point every day with pro...
An investment analyst found that a certain stcok price goes up or down a point every day with probabilities 0.75 and 0.25, respectively. Daily flucturations are independent. Fidn the expected value and the variance of the first day when the stock price goes up? What is the MGF of this day? What is the probability that this day happens on the sixth day?
The current price of Estelle Corporation stock is $25. Its stock price will either go up by 20% or go down by 20% in one year. The stock pays no dividends. The one-year risk-free interest rate is 6%. Using the binomial model, calculate the price of a one-year call option on Estelle stock with a strike price of $25. The price of a one-year call option on Estelle stock with a strike price of $25 is $ (Round to the...
6. This week, the probability that the FTSE Index ends higher than on the previous day is 0.8. Throughout this question, assume that the FTSE index never remains the same from one day to the next. (a) Calculate the probability that the FTSE Index ends down on the previous day's value'. (1 mark) (b) Draw a tree diagram showing the behaviour of the FTSE Index for three con- secutive days. Include probability values. (3 marks) (c) Calculate the probability that...
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